AutoWeb, Inc.
Q4 2016 Earnings Call Transcript

Published: 10 Mar 2017

[Operator:]

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Autobytel's Financial Results for the Fourth Quarter and Full Year ended December 31, 2016. Joining us today are Autobytel's President and CEO, Jeff Coats; the company's CFO, Kimberly Boren; and the company's outside Investor Relations Adviser, Sean Mansouri with Liolios Group. Following their remarks, we'll open the call for your questions. I would now like to turn the call over to Mr. Mansouri for some introductory comments.

[Sean Mansouri:]

Thank you, Karen. Before I introduce Jeff, I remind you that during today's call, including the question-and-answer session, any projections and forward-looking statements made regarding future events or Autobytel's future financial performance are covered by the safe harbor statements contained in today's press release, the slides accompanying this presentation and the company's public filings with the SEC. Actual events may differ materially from those forward-looking statements. Specifically, please refer to the company's Form 10-K for the year ended December 31, 2016, which was filed prior to this call, as well as other filings made by Autobytel with the SEC from time-to-time. These filings identify factors that could cause results to differ materially from those forward-looking statements. There are slides included with today's presentation to help illustrate some of the points being made and discussed during the call. The slides can be accessed by visiting Autobytel's website at www.autobytel.com. When there, go to Investor Relations and then click on Events & Presentations. Please also note that during this call and/or in the accompanying slides management will be disclosing non-GAAP income and non-GAAP EPS, and for purposes of its 2017 guidance, we'll be adjusting 2016 revenues, non-GAAP income and non-GAAP EPS to reflect the exclusion of the company's specialty finance leads product that was divested on December 31, 2016. These are non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in today's press release and/or in the slides which are posted on the company's website. And with that, I'll turn the call over to Jeff.

[Jeff Coats:]

Thank you, Sean. Good afternoon, everyone. Thank you for joining us today to discuss our record fourth quarter and full year 2016 results. As a reminder to those of you who are new to Autobytel, we are a pioneer and leading provider of online digital automotive services, connecting end-market buyers with our dealer and manufacturer customers. We are pleased to announce, we generated record revenues in both Q4 2016 and in full year 2016 while maintaining our commitment to high quality products for our dealer and OEM customers, as you can see on Slide 3 and 4. 2016 represented the year of integration, execution and investment. We completed the integration of the Dealix and AutoWeb acquisitions from 2015, each of which brought us extremely important strategic assets. Additionally, we rolled out the new beta version of our usedcars.com site and we invested in increasing our internal lead generation capabilities, and in developing and optimizing new traffic sources to further accelerate the growth of both our high-quality clicks and leads products. The AutoWeb acquisition brought us both our exciting advertising related click product which has dramatically strengthened our technology leadership in the automotive digital landscape; and additional talented cost effective technology resources in our Guatemala operation. Our click product continues to exceed our expectations with revenues growing more than 300% in 2016 and is already accelerating our overall company growth. This high-growth product has also propelled Autobytel from just the lead generation market into the much larger search and pay-per-click automotive market as you can see on slides five and six. Although, we have been methodical in our roll out of this product, having thus far only introduced it to a small number of our customers, during 2017 we are making it available to many more of our thousands of dealer and OEM customers. We also experienced approximately 98% customer retention with the product in 2016, further validating its exceptional quality of high intent consumer traffic. The usedcars.com site, which came to us with Dealix, is the core around which we are building our used car leads and used car clicks business. This represents a particularly attractive growth opportunity for us, because used car represents less than 10% of our revenues today. Even though the volume of annual used car sales in the United States is generally 2 to 3x that of new car. In Q3 of 2016, we began increasing our investment in traffic acquisition to bolster our leads business with high-quality end-market consumers and to increase the volume of consumers to our click product. We continued that investment in Q4 2016 and as a result, increased our click volume by over 160% and at the same time, increased our effective CPMs by over 80%. At the end of the fourth quarter, we divested our specialty finance leads product, which now enables us to further dedicate time and resources to our core of vehicle leads and fast-growing clicks product for both new and used. Before commenting further, I'd like to turn the call over to Kim and have her take us through the important details of our financial results. Kim?

[Kimberly Boren:]

Thanks, Jeff, and good afternoon, everyone. For those of you following along with our earnings presentation, on slide seven, you can see our fourth quarter revenues increased 11% to $40.4 million, compared to $36.4 million in the year ago quarter. The increase was primarily driven by growth in advertising click revenues and wholesale lead revenues. Lead revenues from automotive manufacturers and wholesale customers, our wholesale channel, increased 9% to $18.6 million from $17.1 million in the prior year period. While lead revenue from automotive dealers, our retail channel, decreased 12% to $12.3 million, compared to $14 million last year. Both the wholesale and retail channels were impacted by the systematic reduction of lower quality lead supply, which effectively began in Q4 of 2015 and continued through Q2 of 2016. Further, the expected impact to retail revenues was driven by the transition of 190 retail dealers into one comprehensive OEM program in the second quarter of 2016. This is proven to be a success as overall revenues for this OEM have expanded 21% since initiating the transition. Moving on to advertising. Our advertising revenues increased 119% to $8.1 million, compared to $3.7 million in the year ago quarter. The growth was due to a significant increase in click revenue driven by the continued investment in our AutoWeb product. Additionally, on slide eight, you'll see click revenues in the fourth quarter increased 219% to $6.4 million compared to $2 million in the same period last year. The triple digit year-over-year increase in click revenue was driven by continued strong growth in AutoWeb as we continue to grow impressions and effective CPMs. The momentum in our click product is further evidenced by the 16% sequential increase from Q3 even with seasonal headwinds in Q4. Moving now to Slide 9, you'll see that we delivered approximately 2.3 million automotive leads during the fourth quarter compared to 2.4 million last year, as we worked to replace the meaningful amount of the eliminated low quality volume with higher quality leads from our internal lead generation. Consistent with lead revenue, retail new leads were down 12% compared to the prior year quarter while used leads were down slightly by 2%. 76% of leads were delivered to the wholesale channel with the remaining 24% to the retail channel. Retail new leads invoiced per dealer, was up 3% compared to the year ago quarter, and retail use leads invoiced per dealer was up 8%. This is consistent with our strategy of focusing on larger dealerships. On Slide 10, you'll see that dealer count stood at 4,115 at December 31st, a 4% decline from Q3. The decrease was driven by dealer churn as we continue to focus on building stronger relationships with larger and more profitable dealers. I remind listeners that this figure would be closer to 22,000 dealer franchises in total, if dealers in our OEM network were included. At the end of the fourth quarter, we sold our specialty finance leads product to Internet Brands. Total consideration included 3.2 million of cash as well as additional transition licensing income totaling 1.6 million over a five year period. In accordance with recent accounting literature released in 2014, the divestiture of the finance lead product does not meet the discontinued operations test, and therefore is included in our 2016 results. For future comparative purposes, we calculated the 2016 revenue impact to be approximately 6.3 million, the non-GAAP income to be just under $0.5 million and the non-GAAP EPS to be $0.03 on a full year basis. As Jeff mentioned earlier with the divestiture of the finance leads product we can now dedicate greater time, energy and resources to our core vehicle lead and fast growing click product. Now moving to Slide 11, gross profit during the fourth quarter increased 1% to 14.6 million, and gross margin was 36.2% compared to 39.7% in the year ago quarter in line with our expectations. In Q3, we made the decision to further invest in our traffic acquisition in order to accelerate the growth of our lead and click products. The decline in gross margin was due to the corresponding increase in our traffic acquisition and technology related costs, as we focused more on accelerated growth and incremental gross profit dollars as opposed to gross margin percentage. We expect gross margin to continue in the mid-30% range over the next several quarters as we invest in our core products to grow revenues and ultimately, gross profit dollars. Total operating expenses in the fourth quarter were 12.8 million, roughly flat compared to the year ago quarter. As a percentage of revenues, total operating expenses were 31.7% compared to 35.5% in the fourth quarter of 2015 with the improvement largely attributable to operating leverage experienced with top line growth. While we've realized considerable leverage over the course of the year, we plan to invest more going forward and further accelerate the growth opportunities we see in our business. On a GAAP basis, net income in the fourth quarter was $1.4 million or $0.10 per diluted share on 13.3 million diluted shares, compared to $1.4 million or $0.10 cents per diluted share on 13.4 million diluted shares in the year ago quarter. We expect our quarterly diluted share count in 2017 to remain around 13.5 million, contingent upon our share price and assuming current outstanding shares, warrants, options and convertible debt remain constant. For the fourth quarter, non-GAAP income, which adds back amortization on acquired intangibles, non-cash stock-based compensation, acquisition cost, severance cost, gain or loss on investment or sale, litigation settlement and income taxes, increased 7% to $4.7 million or $0.35 per diluted share compared to $4.4 million or $0.33 in the year ago quarter. Cash provided by operations for the 2016 fourth quarter improved to $6.2 million compared to $4.6 million in the prior year quarter. On slide 12, you'll see that our cash balance remains strong, with cash and cash equivalents of $38.5 million at December 31, 2016, which represents a 61% increase from December 31, 2015. Total debt at December 31, 2016, was reduced to $23.1 million, compared to $27 million at the end of 2015. With that, I'll now turn the call back over to Jeff.

[Jeff Coats:]

Thank you, Kim. As I mentioned earlier, 2016 represented a year of integration, execution and investment. We completed the integrations of AutoWeb and Dealix, each of which had meaningful impacts to our business in its own right. With AutoWeb, we acquired the technology and development operation that powers our growing clicks business. With Dealix, we added an extensive network of dealers and bolstered our used car practice with the acquired usedcars.com consumer facing website. At the end of the third quarter, we launched a new version of usedcars.com with fully responsive technology and mobile-friendly application. We remain very excited about the strength of the usedcars.com domain and will continue to invest in it in an effort to make it the premier used vehicle destination for consumers. As a reminder, retail used car leads still only represents about 7% of our total leads business today and approximately 9% of revenue, even though used car sales in the United States are 2 to 3x that of new car sales by volume. This provides us with a strong growth path in the months and years ahead. During the fourth quarter, our click volumes from AutoWeb continued to exceed our expectations. As Kim mentioned, volumes were up even sequentially despite seasonal slowdown we typically experience in Q4. Customer feedback has been very positive. We are continuing to increase click volumes with existing clients and plan to add OEMs, large dealer groups, dealer agencies and Tier 2 dealer associations throughout 2017. As I mentioned earlier, our strong growth in clicks up to this point has only come from a small number of dealer and OEM customers. And it's also important to note the minimal churn we continue to experience with the product. As previously announced in Q3, we began heavily investing in traffic acquisition to accelerate the continued growth of both our high-quality clicks product and our high-quality lead supply. As we have mentioned in the previous quarters, OEMs tend to be very selective in the digital marketing spend and they continued to demonstrate increasing demand for our high quality leads and clicks. Before getting into more detail about 2017, I'd like to quickly walk through some of our strong industry metrics from the quarter. On Slide 13, you can see that we estimate sales from consumers submitting leads through Autobytel's network accounted for approximately 5% of all new light vehicle retail sales in the United States in 2016, and approximately 2% of all used car sales. On Slide 14, you'll see that our estimated average buy rate for internally generated leads in the fourth quarter was 17% which remains in our targeted range of 16% to 24%. Because of our ongoing commitment to lead quality, we are continuing to focus on enhanced methodologies to meaningfully increase the mix of internally generated leads from the current 80% level, while only utilizing volume from the small number of trusted suppliers who share our commitment to quality. On Slide 15, you'll note that these estimated buy rates have remained consistently strong since Q1 2011. With autobytel.com generating an average buy rate of 25% and all Autobytel internally generated leads at about 18%. Now moving on to 2017; 2017 will be a year of growth and continued investment for Autobytel. Specifically, we will focus on investments in technology, including investment in our consumer acquisition technology, the AutoWeb ad platform and our consumer facing websites which include car.com, autoweb.com, autobytel.com and usedcars.com. We expect these investments to ultimately enhance and simplify the consumers' path to purchase of new or used cars and trucks. As mentioned before, we've migrated our previously outsourced development resources to our in-house Guatemala operations. And during the fourth quarter we further repositioned our resources by removing redundant divisions at the corporate level and strengthened our U.S. and Guatemalan development teams. We plan to continue investing in these development teams throughout 2017 as we believe this will further accelerate the growth of both our click and core leads products and especially our usedcars.com website. As we continue to optimize our products and service offerings, we will also continue to bolster our sales and marketing effort. Our used car business remains a focal point for growth, and we continue to increase the level of resources dedicated to ramping our used car platforms for internal lead generation. Moving on to the industry outlook, as you can see on Slide 16, Automotive News has the seasonally adjusted annual run rate, or SAAR, for total sales at 17.7 million units for February 2017, up from 17.6 million units one year ago and 17.5 million units in January. And on Slide 17, you'll see that in February J.D. Power LMC Automotive maintained their full year 2017 total light vehicle sales forecast at 17.6 million, an increase of 0.2% from 2016. The forecast for retail light vehicle sales also remained at 14.1 million units essentially flat from 2016. Now moving on to our 2017 business outlook, highlighted on Slide 18. We currently expect revenue to range between $156 million and $160 million, an increase of approximately 4% to 7% from 2016. We also expect non-GAAP income to range between $16.8 million and $17.3 million, representing an increase of up to approximately 3%, with non-GAAP diluted EPS ranging between $1.24 and $1.28 on 13.5 million shares. Note that for comparative purposes, the foregoing percentage growth calculations and the 2016 non-GAAP diluted EPS exclude 2016 revenues, non-GAAP income and non-GAAP EPS related to our specialty finance leads product that was divested on December 31, 2016. As we stated last year, our outlook reflects our continued expectation to grow both revenues and profit dollars in 2017. As we look ahead to the remainder of 2017, we will continue to reinvest in our business to drive sustainable long-term organic growth and further solidify Autobytel's position as a leader in the digital automotive landscape. We will also maintain our keen focus on providing our dealer and OEM customers with high-quality, high-intent car buyers. Be it through new or used car leads, clicks or one of our many value-added product offerings, we remain committed to helping our customers sell more cars and trucks. Karen, at this time, we'd like to open the call for questions.

[Operator:]

Thank you, sir. [Operator Instructions] Our first question comes from the line of Sameet Sinha from B. Riley.

[Sameet Sinha:]

Yes. Thank you very much. I have a couple of questions here. Let's talk about the clicks business. I mean, this was pretty strong much more than we had expected. What sort of growth should we be expecting as you open the program to more dealers and partners and OEMs? And this opening up should we expect more of a second half weighted results? Or do you think the benefits will start to accrue from Q1 sales? Secondly, can you talk about your experience with this increased traffic investments. I mean, gross margins came in a little higher than we had expected, but you can you talk about the different sources that you have started using and where you have been able to optimize and in case the mid-30s guidance that you have, that you've given for gross margin. Is that more a function of that you'll keep those margins and try to grow revenues? Or that you would try to optimize for gross profit margins?

[Jeff Coats:]

Sameet, I would say that, so let me answer your second question first. We have been working through a lot of the new traffic sources. I would say, we're still in the middle of it. We will be doing it throughout this year. We have identified a few that are working nicely for us thus far, where we're getting pretty interesting volume and margins that are probably a little better than we initially anticipated. I wouldn't necessarily take that as something that we're going to see on everything that we do or on a continued basis. It's just too early to kind of make that call in terms of what we're doing. But it is looking pretty good so far from that standpoint in terms of qualifying these new traffic sources.

[Kimberly Boren:]

And then, Sameet, I can answer your second -- your first question, excuse me, around growth. So we're expecting right now to continue to see somewhat of linear growth in 2017. So I would have the growth roughly at a linear levels, there'll be some seasonal impact in Q3 because that's clearly our strongest quarter, and the traffic drives it. But that's how I would go ahead and model it. We haven't necessarily provided guidance in terms of the growth in the click revenues but I would anticipate seeing the same growth dollars last year that we saw in 2015 to 2016.

[Sameet Sinha:]

One follow-up question, you spoke about investment in some of your consumer side, seems like there's going to be a major overhaul that you intend to do on all your sites. And on that usedcars.com, Jeff I think I was of the impression that you're probably going to push that out -- investment out into '18 considering there's so much traction that you're getting on the clicks business. Seems like you are now saying you'll be investing in it right now. Is that a fair assessment?

[Jeff Coats:]

It is. We are investing in it now. We launched the new beta version of the used car site in September. There's, I would say, a fairly large amount of additional capabilities, and bells and whistles that we're in the process of adding to it. One of the really extremely positive benefits promoting internally Billy Ferriolo from running our Tampa operation to being Chief Operating Officer is he's been working with the development teams in both the United States and in Guatemala to reorganize how we do some of our development work in order to accelerate making product improvements to both our clicks business, our lead engine and the way we're doing our lead generation, as well as to the consumer facing websites. I would say that the biggest beneficiary of the current investments in the consumer facing sites will continue to be the usedcars.com site, as well as the car.com site. We have already largely overhauled the car.com site previously and again, we're adding bells and whistles to that. We will be making investments in the other sites along the way but I would say those two currently are the -- saving the primary investment dollars. And those investments will be made within the context of the financial outlook that we just provided.

[Operator:]

And our next question comes from the line of Eric Martinuzzi from Lake Street.

[Eric Martinuzzi:]

I wanted to go a little deeper on the guidance here. And first of all, I just want to kind of make sure I've got the apples-to-apples correct on the specialty finance leads impact. If I take the mid-point of your 2017 guidance for revenue, that's a 158 million, so on apples-to-apples I would add 6.3 million to that assuming no growth in the specialty finance lead, if you haven't sold it. We'd be talking about like 164.3 million number for kind of pro forma in 2017. Is that the way to think about it?

[Kimberly Boren:]

Correct.

[Eric Martinuzzi:]

Okay. And then same thing on the EPS about 26 midpoint plus $0.03, it would be about $0.29 that you not sold for pro forma 2017?

[Kimberly Boren:]

Correct. On heavier share count.

[Eric Martinuzzi:]

Okay. And then just going into the seasonality. I know you guys are trying not to be in the quarterly earnings guidance business. But given what happened last year, where there was so much of the year was back end loaded. I'm just curious to know, let's talk about kind of revenue first. If I look back in 2016, obviously a lot of moving parts, you got the pay-per-click growth on the one hand, you got the Dealix cleansing on the other hand. But it was kind of 40s, 45%, 46% of revenue in the front half with 54% in the back half. That would for a year, last year where you did 157 million and then we're talking about midpoint 158 million this year. Is that, does that top-line kind of front half, back half through this year?

[Kimberly Boren:]

There'll still be further growth on the back half of the year, Eric. You probably won't be as huge because of what we were able to do after we cut out the low-quality lead supply in the first quarter of 2016. So it'll be a little heavier from the 45%, I don't have any counts in front of me, but I'm using your numbers, but not materially.

[Eric Martinuzzi:]

Okay. Well, maybe I can go a little more granular. The consensus estimates for Q1, you probably don't have it in front of you, but I do. We've got a revenue consensus of around 36 million and an EPS of 21 million. Is there a comfort level or discomfort level? Can you comment at all on that?

[Kimberly Boren:]

I'm sorry, Eric. I can't give quarterly guidance at this point in time.

[Eric Martinuzzi:]

Okay. And then as far as the layout of the earnings throughout the year, you've kind of talked about we won't have maybe as much seasonality on the revenue side for the, on the top-line. But the EPS, I did the same quick math on your backend loaded 2016 and it was breathtaking that, you did $0.44 in the front half, sorry, $0.46 in the front half and $0.84 in the back half to get you [indiscernible]. Given the midpoint guide now, again, we're talking about $1.26, so down $0.04, and I understand all the reasoning behind it. But that the laying out of the EPS, given your commentary on the revenue, does that same logic flow or there are expense items that would skew different from the revenue weighting that you've already commented on?

[Kimberly Boren:]

Yes. So the non-GAAP income and EPS should flow similarly to last year in the same fashion is that we have significantly higher employee-related and trade costs in the first half of the year. Those will continue. So again, it won't be as skewed similarly to the revenue, but it will still be skewed in the same direction.

[Eric Martinuzzi:]

Okay. That's helpful. The, as I look to the pay-per-click investments here, obviously we've gotten terrific growth. But we're also spending a good bit of money on pay-per-click. We're trying a lot of different things here. You're working with a select group of partners, but I just -- it feels like there's an element of, I don't want to say profitless prosperity but when do we kind of get a return on this investment? Is it shipping this from kind of the point players to the more broader adoption, we start to see some leverage? Is that what turns it into the profit engine that we hope it'll be?

[Jeff Coats:]

I think the way for you to look at that is, as we've stated before and as we stated today, we've really been slow walking the rollout of that product, particularly since we completed the acquisition and brought it internally. And that was done in part because we really needed to integrate it -- we needed to integrate it into our existing financial systems and we've been doing development work on top of that integration in order to have better visibility into growth, margin and other things like that within the clicks product. We are now ready to start rolling it out. We have already begun to start rolling it out on a more accelerated basis. And so it will be somewhat straight line during the year as Kim mentioned. But that's also going to be a function of growth with the existing customers as well as signing on new customers throughout the course of the year.

[Eric Martinuzzi:]

I follow the top line part of that, I was just more about the adjusted EBITDA or the adjusted operating flow-through contribution margin below the revenue line?

[Jeff Coats:]

Well, I mean, there's always leverage in a situation. I mean, we're already -- we pay our sales organization a salary which is a fixed component and then their commission is based on sales or a variable. So we do have a certain amount of a fixed component to our expenses related to that, that we need to cover. I mean candidly, it's one of the reasons why in the third quarter every year you always see a generally much more robust bottom line because that's where you can really see the leverage in our business as revenue increases based on the seasonal uptick based on our existing cost structure, but a lot more of those dollars fall through to the bottom line. The metrics that we saw in the fourth quarter after taking out some costs -- some incremental costs in the business, I mean we did shift some cost out of the business during the fourth quarter and got our percentage of OpEx down to 31% from 35%, a very nice move from a leverage standpoint.

[Eric Martinuzzi:]

And then last question for me. You attended the NADA conference. I know there is certain -- when people hear the name Autobytel they immediately think leads. As far as your conversations with key partners at NADA, is there any feedback, any anecdotal feedback that you can share with us as far as either on the lead side or on the pay-per-click side where there were any aha moments and light bulb moments for prospects or existing customers?

[Jeff Coats:]

I don't really know how to think about it from an aha moment. I can tell you that NADA this year was overall extremely positive. It was in New Orleans this year. It was in New Orleans this year. It was one of the largest attendances in years. So despite the fact that there is some level of concern certainly in the stock market and to some extent in the automotive market about automobile sales starting to touch a ceiling, there was a great deal of excitement in the industry. Now some of that is also coming, because we have a new, more conservative anti-regulation regime in Washington. There is an expectation that some of the CAFE rules and other things maybe softened somewhat, which will help the manufacturers, which will help the dealers. So I'd say overall, there was a real positive sentiment. We saw a lot of traffic in our booth at NADA. We always have a booth there. It's a great, and in fact, for this past NADA, we actually sold more new relationships than we have in several of the recent ones. So I would say, overall, I mean, people do know Autobytel as a recognized player in the industry. We are getting credit for our many years of focus on improving the quality of the leads product that we sell and helping bring up the overall lead quality in the industry. I would say, a lot of people are very excited about our new clicks product. So we're definitely moving in the right direction from that standpoint.

[Operator:]

Thank you [Operator Instructions]. Our next question comes from the line of Ed Woo from Ascendiant.

[Edward Woo:]

Yes. Congratulations on the quarter guys. I had a question in terms of, now that you guys are transitioning more or growing your pay-per-click business much more. How do you see the competitive environment? Do you still see your biggest competitors are the same ones before? Are you kind of having kind of a new focus on different, I guess, competition?

[Jeff Coats:]

Ed, I think the way to think about that is, it's not so much product-to-product that we're competing with, it's marketing dollar, budget allocation. So a dealer is only going to spend so many dollars on their digital marketing. We buy for a piece of that budget, so do the other players who have been our traditional competitors, historically. We are, I'd say, in the click side of the business to some extent dealing with a larger number of relatively small players at the dealer level, who don't necessarily have the scale nor scope that we do to drive high volumes of really high-quality traffic. So, and of course, we get that because of our 14 years of long tail search traffic from our lead generation operation in Tampa. The two are absolutely interconnected. So our legacy of being the largest oldest lead company has been a huge plus for us in developing the new pay-per-click business, because it's that high-quality traffic that we're now also converting instead of just in the leads also in the clicks for our dealer and manufacturer customers.

[Edward Woo:]

There were some discussions last year about how a lot of these retailers or dealers wanted to I guess establish their own direct relationships with the consumers and trying to develop their own digital strategies. Have you seen any change in a dealers' focusing and allocating their digital, I guess, marketing budgets to internal sources versus using people like you guys?

[Jeff Coats:]

I'd say it's similar to what -- I mean it's not really different than what we've seen for the last couple or three years. Dealers are interested in developing relations as much as they can directly with consumers. I would say however, they all recognize and value strongly the leads they get, especially from us but also from a few other players. Having said that our click product is absolutely allowing them to establish that direct relationship with the consumer, so we kind of have a very nice bag of products that we can lay out for a dealer to help them the traditional lead way and a new updated, more direct relationship with the consumer by dropping that consumer onto a dealer's website on a vehicle description page, or a specials page or something like that. So I don't know that it's changed dramatically over the last two or three years. But we now certainly are participating more on the pay-per-click side and are becoming one of the larger players as that piece of the market continues to grow.

[Operator:]

Thank you. And that does conclude our question-and-answer session. I would like to turn the call back over to Mr. Coats for closing remarks.

[Jeff Coats:]

Thank you, Karen. Thanks everybody for joining us on the call today. I'd like to thank our team of hard working and dedicated employees. We look forward to speaking with our investors during our Q1 call in May. In addition, I'm doing several non-dealer roadshow investor meetings with two of our analysts in San Francisco, Denver and Salt Lake City later this month, and in New York in April. We look forward to speaking with you. Thank you.

[Operator:]

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.