DEALERTRACK HOLDINGS INC Q4 2012 Earnings Conference Call Transcript - Thomson StreetEvents

DEALERTRACK HOLDINGS INC Q4 2012 Earnings Conference Call Transcript

18 pages (11954 words) — Published Feb 25, 2013
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Abstract:

Edited Transcript of TRAK earnings conference call or presentation 25-Feb-13 10:00pm GMT

  
Brief Excerpt:

...Thank you, operator. Hello, everyone. Thanks for joining us this evening. I am pleased to report that DealerTrack closed 2012 with a strong finish. In the fourth quarter we exceeded $100 million in quarterly revenue for the first time. Revenue totaled $101.8 million, an increase of 12% on both...

  
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The following is excerpted from the question-and-answer section of the transcript.

(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)

Question: Peter Goldmacher - Cowen and Company - Analyst : Eric, I just wanted to ask you a quick question on your guidance. So, you think that the late start to tax season could make Q1, which is seasonally weak, just maybe a little bit weaker, so you'd be more comfortable as we build out our quarterly models maybe keeping Q1 a bit soft and then more -- slightly more than usual strength in Q2 and Q3?


Question: Peter Goldmacher - Cowen and Company - Analyst : Okay. And can you talk a little bit more about this Casey & Casey acquisition? Is it -- just a little bit more commentary than in your prepared comments would be helpful, I think.


Question: Peter Goldmacher - Cowen and Company - Analyst : So this deal wasn't necessarily a technology deal. It was just a geographic -- geographically motivated? And does it have -- once it's part of the DealerTrack -- once it's part of DealerTrack, can it move out from Louisiana into Mississippi, Alabama, Texas, --


Question: Peter Goldmacher - Cowen and Company - Analyst : What -- I'm sorry. I'm still confused. So you get these relationships, and then, as the opportunity to sell more stuff into those clients -- because if it's the market leader and it's a $7.5 million business and you paid $20 million, I guess I'm thinking you want it for more than just what they're doing now, right?


Question: Peter Goldmacher - Cowen and Company - Analyst : Okay. Now, my -- the question I really had, can you give us an update on a little more detail on Inventory and how your fixes have gone and how the market's reacted to the year of more challenges than you had hoped?


Question: Peter Goldmacher - Cowen and Company - Analyst : I hope so.


Question: Peter Goldmacher - Cowen and Company - Analyst : Okay. Great. Thank you. companies.


Question: Lauren Choi - JPMorgan - Analyst : This is Lauren for Sterling at JPMorgan. I just wanted to go over the growth rates really quickly. So, on the transaction side for 2013 you mentioned 23% at the midpoint, and then also I guess the new cars is 3% growth for 2013. Can you just help me maybe rank or tell me a little bit about what are the major growth drivers for '13 that you're thinking about?


Question: Lauren Choi - JPMorgan - Analyst : So then I'm talking about the other side, which was -- let's see here was it 9%?


Question: Lauren Choi - JPMorgan - Analyst : 12%? That's right.


Question: Lauren Choi - JPMorgan - Analyst : Right.


Question: Lauren Choi - JPMorgan - Analyst : Okay. companies.


Question: Lauren Choi - JPMorgan - Analyst : That is still -- I think in one way you talk about half of the transaction as still coming from the credit application network. I want to understand, are there new growth drivers that are gaining traction in '13 that may not have been there in 2012, or are we still thinking similar run rates?


Question: Lauren Choi - JPMorgan - Analyst : Okay. And what about on the subscription side relative to inventory, and then how do you think about DMS in '13?


Question: Lauren Choi - JPMorgan - Analyst : Got it. Great. Next question is on Honda. Can you help us also understand a little bit about the economics on the contract? I think first, I guess the credit application network -- the $7 million to $10 million you mentioned for '14 is that mostly from that still? Or are you assuming a build out, and what is exactly that you are assuming in there?


Question: Chris Hogan - Barclays Capital - Analyst : This is actually Chris Hogan in for Rayma. I had a quick question on the Honda deal as well. Can you talk a little bit more about exactly the -- how in depth the development work is that's going to go into the platform? And is there any risk that it takes longer than you guys expect or takes more money than you expect to build that platform in conjunction with them?


Question: Chris Hogan - Barclays Capital - Analyst : Right. Okay. No, that makes sense. And then I think you talked about it a little bit in the press release, but, with those milestones, obviously that determines whatever certain pieces of the revenue that's embedded in the agreement, kicks in with each milestone that gets delivered, I assume. That's just how the agreement's set up?


Question: Chris Hogan - Barclays Capital - Analyst : Okay. That makes sense. And then, as you look at the fall of 2013, I know you've talked about a little bit about it in Q1, but how do you think about the mix -- the credit quality of the borrowers throughout the full year? Do you expect any material change, or should it hold relatively stable compared to what we saw in 2012?


Question: Chris Hogan - Barclays Capital - Analyst : Got you. Okay. Last one real quick, the Casey & Casey revenue, you said it was about $7.5 million in 2012. I want to make sure I heard you guys correct, that's not obviously included in any of that transaction revenue guidance that you gave, and you expect that to grow about 15% in 2013, right?


Question: Chris Hogan - Barclays Capital - Analyst : Great. Thanks a lot, guys.


Question: Gary Prestopino - Barrington Research Associates, Inc. - Analyst : Mark, with signing of Honda and Acura, what captives don't you have at this point now? Is it just Ford and Toyota, ex-Toyota Southeast?


Question: Gary Prestopino - Barrington Research Associates, Inc. - Analyst : Okay. Great. Well, it's good news about Honda.


Question: Gary Prestopino - Barrington Research Associates, Inc. - Analyst : In terms of Cars.com, are you doing the same thing for them that you're doing for Autotrader? Are you putting that -- what is it Finance Driver on the website? Or am I mistaken?


Question: Gary Prestopino - Barrington Research Associates, Inc. - Analyst : Okay. All right. And then in terms of -- just a little confused here with titling and registration and states that do it. Can you -- how many states allow for electronic registration? How many allow for electronic titling, and how many are you in, respectively, in each of those categories?


Question: Gary Prestopino - Barrington Research Associates, Inc. - Analyst : Okay. Of 18. All right. So given in -- are there in a state like Louisiana, probably a midsize state population-wise, are there multiple entities that do this electronic registration? And then, in order to get into the other states, too, it's got to be by versus a build decision then? companies.


Question: Gary Prestopino - Barrington Research Associates, Inc. - Analyst : So in the states that in the nine that you're not in right now, if you were to greenfield, what do you have to do? Do you have to get a direct electronic connection into the DMV?


Question: Gary Prestopino - Barrington Research Associates, Inc. - Analyst : Just one last question on that. With registration of vehicles, does the dealer when you trade in a car, does the dealer have to register that car with the DMV as well? Would that be done electronically through the system, or is it just on car sales to the public?


Question: Gary Prestopino - Barrington Research Associates, Inc. - Analyst : I promise just two more questions. Would a -- does a dealer sole-source this, or would a dealer multiple source this?


Question: Gary Prestopino - Barrington Research Associates, Inc. - Analyst : And then average ticket for this, can you give us an idea what that is, or is that something you can't make public?


Question: Gary Prestopino - Barrington Research Associates, Inc. - Analyst : Okay. Thank you.


Question: Matt Williams - Evercore Partners - Analyst : Just one -- I guess two questions on the Honda deal that hasn't really come up to this point. We talked a little bit about the revenue milestones, and obviously that's something that's further down the road. I'm a little more interested on the expense side. And I understand that it's going to accelerate some investments for this next yea and into '14 as well. But can you provide any sort of color on how is that going to be a set level of increased expense each quarter? Is that going to ramp throughout the year? Just any sort of linearity color that you could provide would be helpful.


Question: Matt Williams - Evercore Partners - Analyst : Okay. That's helpful. Thanks. And then the other component, as you hit these milestones, throughout the development process and more things go live, is there an opportunity to take what you're developing with Honda to other vendors and other relationships that you have? Or is this strictly going to be just strictly developed for Honda, and it's going to be just for them going forward? Or do you have other revenue opportunities outside of just the relationship with Honda with some of the development work you're doing?


Question: Matt Williams - Evercore Partners - Analyst : Okay. Great. Maybe just one last one switching gears a little bit. You announced the pilot with Cars.com. Could you provide a little bit of an update on the Autotrader relationship and how that is progressing? Thanks.


Question: Matt Williams - Evercore Partners - Analyst : Okay. Great. Thanks, guys.


Question: Mitch Bartlett - Craig-Hallum Capital Group - Analyst : So, some 60,000 [thing]. We've just gone through Autotrader and Cars.com, but in the past you've been a little bit reticent to give the green light on Digital Retailing -- the dealers contracting with the on Digital Retailing. Did you come off this big conference -- I think I heard you say earlier that you expect Digital Retailing to be material in 2013. Are you getting the sense that these guys are starting to move in that direction? The dealers?


Question: Mitch Bartlett - Craig-Hallum Capital Group - Analyst : All right. Second question would be not a lot of this call was devoted to ClickMotive. You just acquired it early days, but it was a significant new market that you're opening up a new kind of -- is it fair to say that, as you are an acquisitive company, and you are obviously back filling certain areas with some of your acquisitions, but that front of the store online marketing kind of exposure will be an area that you are focused on? Is it a high priority area going forward?


Question: Mitch Bartlett - Craig-Hallum Capital Group - Analyst : Interesting. Last question is related to Honda. So, if I go back to the GMAC deal that you did it, was also a very large customized deal with implementation period. But also at the end of that, there was supposed to be the opportunity not only to capture a lot of their basic credit app is this but also to expand to a lot of your other products compliance, et cetera. Did that happen such that you see the big deals paying off in an expanded cross sell?


Question: Mitch Bartlett - Craig-Hallum Capital Group - Analyst : Got it.


Question: Mitch Bartlett - Craig-Hallum Capital Group - Analyst : I appreciate the answer.

Table Of Contents

Dealertrack's Acquisition of Dealer.com Conference Call Transcript – 2013-12-19 – $54.00 – Edited Transcript of TRAK M&A conference call or presentation 19-Dec-13 11:00pm GMT

DEALERTRACK HOLDINGS INC at Barclays Select Growth Conference Transcript – 2013-11-18 – $54.00 – Edited Transcript of TRAK presentation 18-Nov-13 6:55pm GMT

DEALERTRACK HOLDINGS INC Q3 2013 Earnings Conference Call Transcript – 2013-11-05 – $54.00 – Edited Transcript of TRAK earnings conference call or presentation 5-Nov-13 10:00pm GMT

DEALERTRACK HOLDINGS INC Q2 2013 Earnings Conference Call Transcript – 2013-08-05 – $54.00 – Edited Transcript of TRAK earnings conference call or presentation 5-Aug-13 9:00pm GMT

DEALERTRACK HOLDINGS INC Q1 2013 Earnings Conference Call Transcript – 2013-05-08 – $54.00 – Edited Transcript of TRAK earnings conference call or presentation 8-May-13 9:00pm GMT

DEALERTRACK HOLDINGS INC Q3 2012 Earnings Conference Call Transcript – 2012-11-08 – $54.00 – Edited Transcript of TRAK earnings conference call or presentation 8-Nov-12 10:00pm GMT

DEALERTRACK HOLDINGS INC Q2 2012 Earnings Conference Call Transcript – 2012-08-07 – $54.00 – Edited Transcript of TRAK earnings conference call or presentation 7-Aug-12 9:00pm GMT

DEALERTRACK HOLDINGS INC Q1 2012 Earnings Conference Call Transcript – 2012-05-08 – $54.00 – Edited Transcript of TRAK earnings conference call or presentation 8-May-12 9:00pm GMT

DEALERTRACK HOLDINGS INC Q4 2011 Earnings Conference Call Transcript – 2012-02-21 – $54.00 – Edited Transcript of TRAK earnings conference call or presentation 21-Feb-12 10:00pm GMT

Dealertrack Hldg Inc Q3 2011 Earnings Conference Call Transcript – 2011-11-07 – $54.00 – Final Transcript of TRAK earnings conference call or presentation 7-Nov-11 10:00pm GMT

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Thomson StreetEvents. "DEALERTRACK HOLDINGS INC Q4 2012 Earnings Conference Call Transcript" Feb 25, 2013. Alacra Store. Nov 27, 2014. <http://www.alacrastore.com/thomson-streetevents-transcripts/Q4-2012-DEALERTRACK-HOLDINGS-INC-Earnings-Conference-Call-T4992381>
  
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Thomson StreetEvents. (2013). DEALERTRACK HOLDINGS INC Q4 2012 Earnings Conference Call Transcript Feb 25, 2013. New York, NY: Alacra Store. Retrieved Nov 27, 2014 from <http://www.alacrastore.com/thomson-streetevents-transcripts/Q4-2012-DEALERTRACK-HOLDINGS-INC-Earnings-Conference-Call-T4992381>
  
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