DealerTrack Grows Annual Transactions 27 Percent
LAKE SUCCESS, N.Y. — Even while calling the second half of 2007 a challenging environment, DealerTrack announced that the number of transaction processed through its network jumped 27 percent for the year. This is up to 90.9 million, compared to 71.5 million in the prior year.
As for the fourth quarter, its number of transactions was 20.8 million, up 7 percent from about 19.5 million processed in the same quarter of 2006.
Moreover, the number of revenue-generating subscriptions in the network reached 28,966, up 34 percent from 21,613 at the end of 2006.
DealerTrack also grew its number of active financing sources for the year, hitting 465, up 52 percent from 305 in the previous year.
The number of active dealers stood at 22,043 at the end of the year, officials also noted.
Breaking down the financial results, the company reported GAAP revenue of $233.8 million, up 35 percent from $173.3 in 2006.
Meanwhile, net income came in at $19.8 million, compared with $19.3 million. Officials noted that GAAP net income for 2006 included other income of $1.4 million.
For the fourth quarter, DealerTrack posted GAAP revenue of $60.7 million, up 33 percent from $45.7 million in the same period of 2006.
Moreover, GAAP net income was $4.1 million, down from $5.7 million in the same time frame of the prior year; however, officials noted that the fourth quarter of 2006 included other net income of $1.4 million, resulting from a purchase adjustment of a prior year's acquisition.
Discussing the results, Mark O'Neil, chairman and chief executive officer, said, "Despite a challenging macroeconomic environment in the latter part of the year, our 2007 results were very strong.
"We achieved significant revenue, EBITA and cash net income growth for the year due to great execution and innovation within both our subscription and transaction business," he continued.
"Our accomplishments included expansion into the DMS and accessories markets, the signing of significant customer relationships such as the Asbury Automotive Group and the introduction or enhancement of several exciting products such as the DealerTrack Leads Network, Dealwatch and InventoryPro," he pointed out.
Looking ahead to 2008, the company said it expects GAAP revenue to reach $270 million to $276 million. As for net income, DealerTrack expects it to hit $24.8 million to $26.2 million.
"We are pleased to be able to provide guidance that shows our ability to grow revenue in a range of 15 percent to 18 percent despite a challenging economic environment," O'Neil said. "Our expected profitability is strong, particularly when you consider that included in our guidance is the cost of approximately $7 million, or $0.10 per diluted share, in the year in relation to our outstanding patent litigation.
"We believe this expenditure is needed to defend our intellectual property," he continued. "We anticipate that based on our scheduled trial date in July 2008, that this will be the final year that this level of expenditure will be necessary."
The litigation is revolving around lawsuits and countersuits between DealerTrack, RouteOne and Finance Express. (For more details, stay tuned to SubPrime Auto Finance News).
He went on to indicate that the company is continuing to invest in developments such as its Arkona system, Inventory Pro, the Aftermarket Network, the Accessories Network and the independent dealer initiative.
"Our fundamental growth strategy remains consistent for 2008," O'Neil pointed out. "We will look to expand the number and nature of participants on the network, to continue to cross-sell our products to existing customers, to expand our product offerings and to complete targeted strategic acquisitions.
"All of these priorities can contribute to greater efficiency in the dealership, thus enhancing dealer profitability while strengthening the DealerTrack network," he said.
DealerTrack Launches Network for Independents
Along the lines of this growth strategy, the company announced in early March a Web-based network designed specifically for independent dealers to connect them with financing companies.
According to officials, the DealerTrack Independent Network features risk-mitigation capabilities, which can allow dealers to offer more financing options for consumers.
ACC Consumer Finance, AmeriCredit Financial Services, Fireside Bank, Turner Acceptance Corp. and Universal Special Auto Finance have agreed to join the DealerTrack Independent Network, the company noted.
"By providing a comprehensive package of risk-mitigation capabilities, we believe our new Independent Network will enable many more lenders and independent dealers to be comfortable doing business with each other," O'Neil said.
The Independent Network also includes ongoing dealer monitoring through DealerTrack's partnership with VINtek.
Additionally, the program features title processing and title insurance as DealerTrack has struck a deal with Vehicle Title Agency.
DealerTrack explained that while many of its users —franchised dealerships or large independent dealers — have access to multiple financial sources, it can often be difficult for smaller independent dealers to build similar relationships with lenders.
"The inability of many independent dealerships to offer financing options to their customers limits their potential revenue opportunities and puts them at risk for losing deals," indicated Richard McLeer, senior vice president of strategy and development for DealerTrack. |
"By partnering with VINtek and Vehicle Title Agency LLC, we are minimizing the risks lenders sometimes face, benefiting lenders, dealers and consumers alike," McLeer added.
"We believe the Independent Network is a key strategic solution for DealerTrack. It has the potential to leverage our existing credit application network not only in connecting more dealers and lenders, but also by creating new growth opportunities for DealerTrack," McLeer explained.
"Subscription and transaction products such as the DealerTrack Arkona DMS, our InventoryPro inventory management solution, the DealerTrack Aftermarket Network, online used car valuation tools and our compliance solutions can help independent dealers better manage their business," McLeer added.
U.S. Bank Selects DealerTrack Specialty Solutions
DealerTrack Specialty Solutions also recently announced that Minneapolis-based U.S. Bank, a division of U.S. Bancorp, has signed an agreement to participate on its online financing platform.
Once implemented, recreational vehicle and marine dealers nationwide will be able to use the DealerTrack Specialty Solutions platform to electronically submit consumer loan applications and complete loan contracts with U.S. Bank, officials explained.
"We are proud of our long-standing relationship with DealerTrack from an automotive standpoint and are delighted to grow with them as they expand their efficient application process to more RV and marine dealers nationwide," said Chris Renn, senior vice president of U.S. Bank Recreation Finance.
"DealerTrack and U.S. Bank already have a strong relationship in the automobile arena," said Patrick Staudt, DealerTrack Specialty Solutions Group vice president. "Adding U.S. Bank to our growing lender community in the RV and marine industry provides these dealers with a variety of products and services that will help them be more successful."
DealerTrack Announces Resignation of Gibson
In late February, Thomas Gibson announced his resignation from DealerTrack's Board of Directors.
The company indicated that it had previously announced that it expected Gibson to resign, as his role as a senior adviser to Cerberus made it difficult for him to continue to fulfill his responsibilities on the DealerTrack board.
"Tom Gibson has made many significant contributions to DealerTrack's growth, and we would like to thank him for his dedicated service," said O'Neil.
Gibson also reported, "I cannot express how much I have enjoyed working with DealerTrack's senior management and my fellow board members over the past three years.
"I believe Mark and his team are doing a terrific job and should be immensely proud of the company they have built, the results they have achieved and the bright future I foresee for the company," he concluded.