LAKE SUCCESS, N.Y., Aug. 11, 2008 (PRIME NEWSWIRE) -- DealerTrack Holdings, Inc. (Nasdaq:TRAK) today reported financial results for the second quarter and six months ended June 30, 2008.
GAAP Results for Second Quarter 2008 * Revenue for the quarter was $63.2 million, an 8.0 percent increase from $58.5 million for the second quarter of 2007. * GAAP net income for the quarter was $3.1 million, a 51 percent decrease from $6.3 million for the second quarter of 2007. * GAAP diluted net income per share for the quarter was $0.07, a 53 percent decrease from $0.15 per share for the second quarter of 2007. Non-GAAP Results for Second Quarter 2008 * EBITDA for the quarter was $13.9 million, a 26 percent decrease from $18.9 million for the second quarter of 2007. * Cash net income for the quarter was $9.4 million, a 21 percent decrease from $11.8 million for the second quarter of 2007. * Diluted cash net income per share for the quarter was $0.22, a 24 percent decrease from $0.29 per share for the second quarter of 2007.
EBITDA is a non-GAAP financial measure that represents GAAP earnings excluding interest, taxes, depreciation and amortization expenses. Cash net income is a non-GAAP financial measure that represents GAAP net income before non-cash stock-based compensation charges (net of taxes), and amortization of acquired identifiable intangibles (net of taxes). See "Non-GAAP Financial Measures" for a further discussion of EBITDA and cash net income, and refer to Attachments 4 and 5 of this press release for reconciliations of GAAP financial measures to non-GAAP financial measures.
"In spite of the worst first-half new car sales since 1993, DealerTrack continues to grow revenue," said Mark O'Neil, chairman and chief executive officer of DealerTrack. "We are conscious of the economic environment and remain focused on being a high value provider of automotive retail software. With record-low car sales and a very challenging credit environment our dealer customers are looking for efficiency, cost savings and increased profit opportunities, all of which our suite of solutions offers."
GAAP Results for Six Months Ended June 30, 2008 * Revenue for the six months was $127.5 million, a 16 percent increase from $110.2 million for the same period in 2007. * GAAP net income for the six months was $5.4 million, a 51 percent decrease from $11.1 million for the same period in 2007. * GAAP diluted net income per share for the six months was $0.13, a 52 percent decrease from $0.27 per share for the same period in 2007. Non-GAAP Results for Six Months Ended June 30, 2008 * EBITDA for the six months was $27.2 million, a 19 percent decrease from $33.5 million for the same period in 2007. * Cash net income for the six months was $18.6 million, a 13 percent decrease from $21.3 million for the same period in 2007. * Diluted cash net income per share for the six months was $0.43, a 19 percent decrease from $0.53 per share for the same period in 2007.
Business Statistics
There were 21,735 active dealers in the DealerTrack network as of June 30, 2008, a 4 percent decrease from a year earlier. The number of active financing sources in the DealerTrack network as of June 30, 2008 reached 659, up 47 percent from a year ago. Transactions processed in the network for the second quarter were approximately 21.0 million, a 10 percent decrease from the second quarter of 2007. Total subscriptions as of June 30, 2008 were 31,499. The average subscription revenue per subscribing dealer was $547 a month compared to $470 a month for the second quarter of 2007. Approximately 62 percent of active dealers in the network now have one or more of DealerTrack's subscription products.
We continue to add new financing sources to the DealerTrack network. During the second quarter we added 81 participants, including the numerous credit unions represented by Aimbridge in the indirect auto financing space. In addition to adding these financing sources, we added approximately 1,400 subscriptions to the U.S. and Canadian networks.
Revised Guidance for full year 2008
Based primarily on a very challenging credit environment, 15-year-low new car sales for the first half of 2008 and a continuing adverse outlook for the credit environment and car sales, DealerTrack has revised its guidance for the full year 2008 as follows:
Expected GAAP Results * Revenue for the year is expected to be between $246 million and $253 million compared to the previous estimate of $268 million to $272 million. * GAAP net income for the year is expected to be between $9.4 million and $12.8 million, compared to the previous estimate of $21.0 million to $22.6 million. * Diluted GAAP net income per share for the year is expected to be between $0.22 and $0.30 per share compared to the previous estimate of $0.48 to $0.52 per share. Expected Non-GAAP Results * EBITDA for the year is expected to be between $48.3 million and $54.3 million compared to the previous estimate of $67.3 million to $70.0 million. * Cash net income for the year is expected to be between $33.9 million and $37.3 million compared to the previous estimate of $45.6 million to $47.2 million. * Diluted cash net income per share for the year is expected to be between $0.80 and $0.88 per share compared to the previous estimate of $1.05 to $1.09 per share.
This guidance is based on new car sales of 13 to 14 million units for the full year 2008 and does not assume a recovery of the auto lending environment this year. It is based on an estimated average of 42.2 million shares outstanding.
"We continue to expand our product offerings and to invest in our existing products," said O'Neil. "We believe we can continue to grow through this economic downturn. It would be shortsighted of us to stop development of new projects; instead, we remain focused on growing DealerTrack by providing our customers with the solutions they need to be more efficient."
DealerTrack will host a conference call to discuss its second quarter 2008 results and other matters on August 11, 2008 at 5:00 p.m. Eastern Time. The conference call will be webcast live on the Internet at http://ir.dealertrack.com/releases_financial.cfm. Live audio of the call will be accessible to the public by calling 877-419-6596 (domestic) or 719-325-4892 (international); no access code is necessary. Callers should dial in approximately 10 minutes before the call begins. A replay of the webcast will be available on the Investor Relations section of the DealerTrack website until August 17, 2008.
Non-GAAP Financial Measures
In this release, DealerTrack's EBITDA and cash net income disclosures are not presented in accordance with generally accepted accounting principles (GAAP) and are not intended to be used in lieu of GAAP presentations of net income. EBITDA represents GAAP earnings excluding interest, taxes, depreciation and amortization expenses. Cash net income represents net income excluding stock-based compensation expense (net of taxes), and amortization of acquired intangibles (net of taxes). EBITDA and cash net income are presented because management believes they provide additional information with respect to the performance of our fundamental business activities and are also frequently used by securities analysts, investors and other interested parties in the evaluation of comparable companies. Management believes the EBITDA and cash net income information is useful to investors for these reasons. EBITDA and cash net income are non-GAAP financial measures and should not be viewed as an alternative to GAAP measures of performance. Management believes the most directly comparable GAAP financial measure for EBITDA and cash net income is GAAP net income and has provided a reconciliation of EBITDA to GAAP net income, and cash net income to GAAP net income, in Attachments 4 and 5 to this press release.
About DealerTrack (www.dealertrack.com)
DealerTrack Holdings, Inc. (Nasdaq:TRAK) is a leading provider of on-demand software and data solutions for the U.S. automotive and related industries. The company's solutions enable dealers to receive consumer leads, submit credit applications and receive responses, compare financing and leasing options, sell insurance, accessories and other aftermarket products, document compliance, and execute financing contracts electronically. In addition, the DealerTrack Arkona DMS (dealer management system) is used by dealerships nationwide. Over 22,000 dealers, including more than 90% of all franchised dealers; over 700 financing sources; and other service and information providers are active in the DealerTrack network.
Safe Harbor for Forward-Looking and Cautionary Statements
Statements in this press release regarding DealerTrack's expected 2008 performance, the benefits of DealerTrack's products for dealers, expectations regarding the automotive lending environment, new car sales for 2008, DealerTrack's growth expectations, and all other statements in this release other than the recitation of historical facts are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995). These statements involve a number of risks, uncertainties and other factors that could cause actual results, performance or achievements of DealerTrack to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements.
Factors that might cause such a difference include: increased competitive pressure from other industry participants, the inability to execute any element of DealerTrack's business strategy, including selling additional products and services to existing and new customers; the impact of the automotive retail industry on DealerTrack's business; the impact of the credit environment and indirect auto lending environment on DealerTrack's business; DealerTrack's success in expanding its customer base and product and service offerings; the impact of some vendors of software products for automotive dealers making it more difficult for our customers to use our products and services; the impact of general economic trends, including interest rates, as well as the trends in the automotive industry, and other risks listed in the Company's reports filed with the Securities and Exchange Commission (SEC), including its 2008 Form 10-K. These filings can be found on DealerTrack's website at www.dealertrack.com and the SEC's website at www.sec.gov. Forward-looking statements included herein speak only as of the date hereof and the Company disclaims any obligation to revise or update such statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events or circumstances.
Attachment (1) Actual Results: Three-Month Period
DEALERTRACK HOLDINGS, INC.
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
June 30,
------------------------
2008 2007
---------- ----------
Net revenue(1) $ 63,181 $ 58,507
---------- ----------
Cost of revenue 27,879 24,158
Product development 3,084 2,281
Selling, general and administrative 28,010 22,313
---------- ----------
Total operating costs and expenses 58,973 48,752
---------- ----------
Income from operations 4,208 9,755
Interest income, net 1,071 1,147
---------- ----------
Income before provision for income taxes 5,279 10,902
Provision for income taxes (2,213) (4,618)
---------- ----------
Net income $ 3,066 $ 6,284
========== ==========
Basic net income per share $ 0.07 $ 0.16
Diluted net income per share $ 0.07 $ 0.15
Weighted average shares outstanding 41,505,503 38,748,405
Weighted average shares outstanding
assuming dilution 42,764,086 40,569,993
(1) Related party revenue $ 646 $ 622
EBITDA (Non-GAAP) (a) $ 13,894 $ 18,853
EBITDA margin (Non-GAAP) (b) 22% 32%
Cash net income (Non-GAAP) (a) $ 9,351 $ 11,816
Diluted cash net income per share
(Non-GAAP) $ 0.22 $ 0.29
---------- ----------
Actual Results: Six-Month Period
Six Months Ended
June 30,
------------------------
2008 2007
---------- ----------
Net revenue(1) $ 127,489 $ 110,232
---------- ----------
Cost of revenue 56,491 45,458
Product development 6,226 4,661
Selling, general and administrative 57,742 43,561
---------- ----------
Total operating costs and expenses 120,459 93,680
---------- ----------
Income from operations 7,030 16,552
Interest income, net 2,542 2,616
---------- ----------
Income before provision for income taxes 9,572 19,168
Provision for income taxes (4,168) (8,059)
---------- ----------
Net income $ 5,404 $ 11,109
========== ==========
Basic net income per share $ 0.13 $ 0.29
Diluted net income per share $ 0.13 $ 0.27
Weighted average shares outstanding 41,569,468 38,685,500
Weighted average shares outstanding
assuming dilution 42,863,406 40,437,270
(1) Related party revenue $ 1,330 $ 1,242
EBITDA (Non-GAAP) (a) $ 27,238 $ 33,496
EBITDA margin (Non-GAAP) (b) 21% 30%
Cash net income (Non-GAAP) (a) $ 18,625 $ 21,315
Diluted cash net income per share
(Non-GAAP) $ 0.43 $ 0.53
----------------------------------------------------
(a) See Reconciliation Data in Attachment 4.
(b) Represents EBITDA as a percentage of net revenue.
Attachment (2)
DEALERTRACK HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)
June 30, December 31,
2008 2007
-------- --------
ASSETS
Cash, cash equivalents and short-term
investments $203,383 $220,144
Accounts receivable, net 27,533 26,957
Prepaid expenses and other current assets 12,610 11,132
-------- --------
Total current assets 243,526 258,233
Long-Term investments available for sale 12,842 --
Property and equipment, net 13,329 12,792
Software and web site development costs, net 12,010 10,771
Intangible assets, net 55,971 69,528
Goodwill 116,098 117,702
Deferred taxes and other long-term assets 16,285 13,900
-------- --------
Total assets $470,061 $482,926
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 21,383 $ 28,676
Deferred revenue 5,503 4,016
Due to acquirees and other current liabilities 2,107 2,731
-------- --------
Total current liabilities 28,993 35,423
Long-term liabilities 9,288 9,141
-------- --------
Total liabilities 38,281 44,564
Total stockholders' equity 431,780 438,362
-------- --------
Total liabilities and stockholders' equity $470,061 $482,926
======== ========
Attachment (3)
DEALERTRACK HOLDINGS, INC.
Summary Cash Flow Information
(Dollars in thousands)
(Unaudited)
Six Months Ended
June 30,
---------------------
2008 2007
--------- ---------
Net cash provided by operating activities $ 24,296 $ 20,538
Net cash provided by (used in) investing
activities (a) $ 111,071 $ (38,356)
Net cash provided by (used in) financing
activities $ (17,504) $ 3,767
----------------------------------------------------------------
(a) For the six months ended June 30, 2008, net cash provided by
investing activities includes $120.8 million in net sales of
investments and auction rate securities that are invested in
tax-exempt and tax-advantaged securities. For the six months
ended June 30, 2007, net cash used in investing activities
includes $66.1 million in net sales of auction rate securities
that are invested in tax-exempt and tax-advantaged securities.
Attachment (4)
DEALERTRACK HOLDINGS, INC.
Reconciliation of GAAP Net Income to Non-GAAP EBITDA
(Dollars in thousands)
(Unaudited)
Three Months Ended
June 30,
--------------------
2008 2007
-------- --------
GAAP net income $ 3,066 $ 6,284
Interest income (1,145) (1,220)
Interest expense 74 73
Provision for income taxes 2,213 4,618
Depreciation and amortization 3,185 2,429
Amortization of acquired identifiable intangibles 6,501 6,669
-------- --------
EBITDA (Non-GAAP) $ 13,894 $ 18,853
======== ========
DEALERTRACK HOLDINGS, INC.
Reconciliation of GAAP Net Income to Non-GAAP Cash Net Income
(Dollars in thousands)
(Unaudited)
Three Months Ended
June 30,
--------------------
2008 2007
-------- --------
GAAP net income $ 3,066 $ 6,284
Non-cash stock-based compensation charges,
net of taxes 2,184 1,484
Amortization of acquired identifiable
intangibles, net of taxes 4,101 4,048
-------- --------
Cash net income (Non-GAAP) $ 9,351 $ 11,816
======== ========
Attachment (4)
DEALERTRACK HOLDINGS, INC.
Reconciliation of GAAP Net Income to Non-GAAP EBITDA
(Dollars in thousands)
(Unaudited)
Six Months Ended
June 30,
--------------------
2008 2007
-------- --------
GAAP net income $ 5,404 $ 11,109
Interest income (2,708) (2,751)
Interest expense 166 135
Provision for income taxes 4,168 8,059
Depreciation and amortization 6,081 4,705
Amortization of acquired identifiable intangibles 14,127 12,239
-------- --------
EBITDA (Non-GAAP) $ 27,238 $ 33,496
======== ========
DEALERTRACK HOLDINGS, INC.
Reconciliation of GAAP Net Income to Non-GAAP Cash Net Income
(Dollars in thousands)
(Unaudited)
Six Months Ended
June 30,
--------------------
2008 2007
-------- --------
GAAP net income $ 5,404 $ 11,109
Non-cash stock-based compensation charges,
net of taxes 4,323 2,777
Amortization of acquired identifiable
intangibles, net of taxes 8,898 7,429
-------- --------
Cash net income (Non-GAAP) $ 18,625 $ 21,315
======== ========
Attachment (5)
DEALERTRACK HOLDINGS, INC.
Reconciliation of Forward-Looking GAAP Net Income
to Forward-Looking Non-GAAP EBITDA
(Dollars in millions)
(Unaudited)
Year Ending
December 31, 2008
-----------------
Expected Range
-----------------
GAAP net income $ 9.4 $12.8
Interest income (5.3) (5.3)
Interest expense 0.4 0.4
Provision for income taxes 7.1 9.7
Depreciation and amortization 12.3 12.3
Amortization of acquired identifiable
intangibles 24.4 24.4
----- -----
EBITDA (Non-GAAP) $48.3 $54.3
===== =====
DEALERTRACK HOLDINGS, INC.
Reconciliation of Forward-Looking GAAP Net Income to
Forward-Looking Non-GAAP Cash Net Income
(Dollars in millions)
(Unaudited)
Year Ending
December 31, 2008
-----------------
Expected Range
-----------------
GAAP net income $ 9.4 $12.8
Non-cash stock-based compensation
charges, net of taxes 9.1 9.1
Amortization of acquired identifiable
intangibles, net of taxes 15.4 15.4
----- -----
Cash net income (Non-GAAP) $33.9 $37.3
===== =====
Attachment (6) Summary of Business Statistics (Unaudited)
DEALERTRACK HOLDINGS, INC.
Three months ended
--------------------------------------------
June 30, Mar 31, Dec 31, Sept 30, June 30,
2008 2008 2007 2007 2007
------ ------ ------ ------ ------
Active dealers(a) 21,735 22,457 22,043 22,551 22,630
Active financing
sources(b) 659 578 536 495 447
Transactions processed(c)
(in thousands) 21,047 23,889 20,836 23,810 23,498
Product subscriptions(d) 31,499 30,098 28,966 27,469 25,621
----------------------------------------------------------------
(a) We consider a dealer to be active as of a date if the dealer
completed at least one revenue-generating credit application
processing transaction using the DealerTrack network during the
most recently ended calendar month.
(b) We consider a financing source to be active in our network as
of a date if it is accepting credit application data
electronically from dealers in the DealerTrack network, including
financing sources visible to dealers through drop down menus.
This counting methodology reflects revisions we made in July 2008
to more accurately reflect the number of financing sources
available on the network.
(c) Represents revenue-generating transactions processed in the
DealerTrack, DealerTrack Digital Services and DealerTrack Canada
networks at the end of a given period.
(d) Represents revenue generating subscriptions in DealerTrack and
DealerTrack Canada in a given period.
DEALERTRACK HOLDINGS, INC.
Three months ended
-----------------------------------------------
June 30, Mar 31, Dec 31, Sept 30, June 30,
2008 2008 2007 2007 2007
------- ------- ------- ------- -------
Transaction revenue
(in thousands) $36,321 $38,167 $35,330 $39,096 $38,596
Subscription revenue
(in thousands) $22,877 $22,386 $21,470 $20,378 $17,444
Other revenue (in
thousands) $ 3,983 $ 3,755 $ 3,942 $ 3,397 $ 2,467
Average transaction
price $ 1.73 $ 1.60 $ 1.70 $ 1.64 $ 1.64
Average subscription
price $ 246 $ 251 $ 253 $ 256 $ 238
Average monthly
subscription revenue
per subscribing
dealership (a) $ 547 $ 547 $ 543 $ 528 $ 470
----------------------------------------------------------------
(a) Represents total subscription revenue divided by subscribing
dealers in US and Canada networks.