Press Release
AutoWeb Reports Third Quarter 2020 Results
“We continued to execute on our plan during the third quarter, as reflected by our highest levels of quarterly gross profit and gross margin in several years,” said
Third Quarter 2020 Financial Highlights
Q3 2020 | Q2 2020 | Q3 2019 | |
Total Revenues | |||
Gross Profit | |||
Gross Margin | 36.1% | 35.5% | 20.7% |
Net Income/(Loss) | |||
Net Income/(Loss) per share | |||
Adjusted EBITDA1 |
Third Quarter 2020 Key Operating Metrics
Q3 2020 | Q2 2020 | Q3 2019 | |
Lead Traffic2 (millions) | 18.7 | 18.3 | 31.7 |
Lead Volume3 (millions) | 1.2 | 1.2 | 1.8 |
Retail Dealer Count4 | 1,707 | 1,854 | 2,414 |
Retail Lead Capacity5 | 105,000 | 100,000 | 143,000 |
Click Traffic6 (millions) | 18.6 | 23.0 | 25.1 |
Click Volume7 (millions) | 4.6 | 5.5 | 6.5 |
________________________
1 Refer to the note below about Non-GAAP financial measures.
2 Lead traffic = total visits to AutoWeb’s owned lead websites.
3 Lead volume = total new and used vehicle leads invoiced to retail and wholesale customers.
4 Retail dealer count = the number of franchised dealers contracted for delivery of retail new vehicle leads plus the number of vehicle dealers (franchised or independent) contracted for delivery of retail used vehicle leads.
5 Retail lead capacity = the number of new and used vehicle leads contracted for by new or used retail vehicle dealers that the dealers wish to receive each month (i.e., “targets”) at the end of the applicable quarter.
6 Click traffic = total visits to AutoWeb’s owned click referral websites and
7 Click volume = the number of times during the applicable quarter that consumers clicked on advertisements on AutoWeb’s owned click referral websites and on
Rowe continued: “Similar to Q2, we have continued to operate intentionally at lower levels of media spend to better align our traffic acquisition with true consumer demand in the market. This is designed to ensure that we are delivering leads submitted by action-minded car buyers, not simply passive shoppers. We know that overall online shopping metrics have increased, however, this does not directly translate into more buyers.
“This approach also enables us to better match lead volume with lower dealership inventory that resulted from vehicle production reductions in Q2 and historically high used car wholesale pricing. Dealers and consumers alike are still contending with broader macroeconomic uncertainty, and with this in mind, we will continue to provide the right mix of high-quality leads and click traffic to our customers by staying aligned with true auto supply and demand dynamics. We do not believe that this is the time to get out in front of the overall recovery.
“As a follow-up to our comments last quarter, in addition to delivering value to our dealer and OEM customers, we have been intently focused on improving our product offerings. In our leads business, we rolled out a new, more contemporary lead funnel experience for mobile audience campaigns in Q1. This improved funnel has increased our mobile conversion rates by more than 50%, , which is significant given that mobile is by far our largest traffic source. Initiatives like this demonstrate our commitment to optimizing user experience and the overall quality of our matching process.
“As we look ahead, Q4 is traditionally one of our slowest quarters due to the holidays and normal seasonality in our business. However, we plan to continue operating efficiently in support of our dealer and OEM customers, while continuing to strategically enhance our product suite to capitalize on evolving consumer shopping habits. We have established a strong foundation to drive sustained improvements to our business, and I want to thank our entire team for their dedication to executing our strategy and delivering value to our customers.”
Third Quarter 2020 Financial Results
Total revenues in the third quarter of 2020 were
Gross profit in the third quarter increased 8% to
Total operating expenses in the third quarter decreased to
Net loss in the third quarter of 2020 improved to
Adjusted EBITDA increased 21% to
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Conference Call
Date:
Time:
Toll-free dial-in number: 1-877-852-2929
International dial-in number: 1-404-991-3925
Conference ID: 8329656
The conference call will also be broadcast live at www.autoweb.com (click on “Investors” and then click on “Events & Presentations”). Please visit the website at least 15 minutes prior to the start of the call to register and download any necessary software. For those who will be joining the call by phone, please call the conference telephone number 5-10 minutes prior to the start time, and an operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 1-949-574-3860.
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Toll-free replay number: 1-855-859-2056
International replay number: 1-404-537-3406
Replay ID: 8329656
Tax Benefit Preservation Plan
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The Plan was adopted by the company’s board of directors to preserve the company’s NOLs and other tax attributes, and thus reduce the risk of a possible change of ownership under Section 382 of the Internal Revenue Code. Any such change of ownership under Section 382 would limit or eliminate the ability of the company to use its existing NOLs for federal income tax purposes. In general, an ownership change will occur if the company’s 5% shareholders, for purposes of Section 382, collectively increase their ownership in the company by an aggregate of more than 50 percentage points over a rolling three-year period. The Plan is designed to reduce the likelihood that the company experiences such an ownership change by discouraging any person or group from becoming a new 5% shareholder under Section 382. Rights issued under the Plan could be triggered upon the acquisition by any person or group of 4.9% or more of the company’s outstanding common stock and could result in substantial dilution of the acquirer’s percentage ownership in the company. There is no guarantee that the Plan will achieve the objective of preserving the value of the company’s NOLs.
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Investors and other interested parties can receive
Note about Non-GAAP Financial Measures
The company’s management believes that presenting Adjusted EBITDA provides useful information to investors regarding the underlying business trends and performance of the company’s ongoing operations, as well as providing for more consistent period-over-period comparisons. This non-GAAP measure assists management in its operational and financial decision-making and monitoring the company’s performance. In addition, we use Adjusted EBITDA as a measure for determining incentive compensation targets. Adjusted EBITDA is used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. Management strongly encourages investors to review the company’s consolidated financial statements in their entirety and to not rely on any single financial measure.
Forward-Looking Statements Disclaimer
The statements contained in this press release or that may be made during the conference call described above that are not historical facts are forward-looking statements under the federal securities laws. Words such as “anticipates,” “could,” “may,” “estimates,” “expects,” “projects,” “intends,” “pending,” “plans,” “believes,” “will” and words of similar substance, or the negative of those words, used in connection with any discussion of future operations or financial performance identify forward-looking statements. In particular, statements regarding expectations and opportunities, new product expectations and capabilities, projections, statements regarding future events, and our outlook regarding our performance and growth are forward-looking statements. These forward-looking statements, including, that the company plans to continue operating efficiently in support of its dealer and OEM customers, while continuing to strategically enhance its product suite to capitalize on evolving consumer shopping habits, are not guarantees of future performance and involve assumptions and risks and uncertainties that are difficult to predict. Actual outcomes and results may differ materially from what is expressed in, or implied by, these forward-looking statements.
Company Contact
Chief Financial Officer
1-949-437-4651
jp.hannan@autoweb.com
Investor Relations Contact:
Gateway Investor Relations
1-949-574-3860
AUTO@gatewayir.com
AUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(Amounts in thousands, except share and per share data) | ||||||||
2020 | 2019 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 11,270 | $ | 892 | ||||
Restricted cash | 3,302 | 5,054 | ||||||
Accounts receivable, net of allowances for bad debts and customer credits of |
||||||||
and net of allowances for bad debt and customer credits of |
14,633 | 24,051 | ||||||
Prepaid expenses and other current assets | 1,145 | 1,265 | ||||||
Total current assets | 30,350 | 31,262 | ||||||
Property and equipment, net | 3,000 | 3,349 | ||||||
Right-of-use assets | 2,956 | 2,528 | ||||||
Intangibles assets, net | 5,135 | 7,104 | ||||||
Other assets | 697 | 661 | ||||||
Total assets | $ | 42,138 | $ | 44,904 | ||||
LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 7,540 | $ | 14,080 | ||||
Borrowings under revolving credit facility | 10,024 | 3,745 | ||||||
Accrued employee-related benefits | 2,071 | 1,004 | ||||||
Other accrued expenses and other current liabilities | 969 | 2,315 | ||||||
Current portion of PPP Loan | 846 | - | ||||||
Current portion of lease liabilities | 837 | 1,167 | ||||||
Current portion of financing debt | 64 | - | ||||||
Total current liabilities | 22,351 | 22,311 | ||||||
Lease liabilities, net of current portion | 2,361 | 1,497 | ||||||
PPP loan, net of current portion | 538 | - | ||||||
Financing debt, net of current portion | 76 | - | ||||||
Total liabilities | 25,326 | 23,808 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity | ||||||||
Preferred stock, |
||||||||
Series A Preferred stock, none issued and outstanding | - | - | ||||||
Common stock, |
||||||||
13,169,044 and 13,146,831 shares issued and outstanding at |
13 | 13 | ||||||
Additional paid-in capital | 365,627 | 364,028 | ||||||
Accumulated deficit | (348,828 | ) | (342,945 | ) | ||||
Total stockholders' equity | 16,812 | 21,096 | ||||||
Total liabilities, minority interest and stockholders' equity | $ | 42,138 | $ | 44,904 | ||||
AUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
AND COMPREHENSIVE LOSS | ||||||||||||||||
(Amounts in thousands, except share and per share data) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Revenues: | ||||||||||||||||
Lead generation | $ | 14,758 | $ | 22,564 | $ | 47,481 | $ | 69,953 | ||||||||
Digital advertising | 3,054 | 5,968 | 11,822 | 17,278 | ||||||||||||
Other | 1 | 20 | 15 | 67 | ||||||||||||
Total revenues | 17,813 | 28,552 | 59,318 | 87,298 | ||||||||||||
Cost of revenues | 11,390 | 22,645 | 41,498 | 70,249 | ||||||||||||
Gross profit | 6,423 | 5,907 | 17,820 | 17,049 | ||||||||||||
Operating Expenses | ||||||||||||||||
Sales and marketing | 1,904 | 2,632 | 6,062 | 8,450 | ||||||||||||
Technology support | 1,451 | 1,819 | 5,094 | 6,797 | ||||||||||||
General and administrative | 3,110 | 2,112 | 9,954 | 10,429 | ||||||||||||
Depreciation and amortization | 225 | 1,200 | 1,506 | 3,640 | ||||||||||||
Total operating expenses | 6,690 | 7,763 | 22,616 | 29,316 | ||||||||||||
Operating loss | (267 | ) | (1,856 | ) | (4,796 | ) | (12,267 | ) | ||||||||
Interest and other income (expense), net | (181 | ) | 117 | (1,087 | ) | 220 | ||||||||||
Loss before income tax provision | (448 | ) | (1,739 | ) | (5,883 | ) | (12,047 | ) | ||||||||
Income taxes provision | - | - | - | 5 | ||||||||||||
Net loss and comprehensive loss | $ | (448 | ) | $ | (1,739 | ) | $ | (5,883 | ) | $ | (12,052 | ) | ||||
Basic and diluted loss per share: | ||||||||||||||||
Basic loss per common share | $ | (0.03 | ) | $ | (0.13 | ) | $ | (0.45 | ) | $ | (0.92 | ) | ||||
Diluted loss per common share | $ | (0.03 | ) | $ | (0.13 | ) | $ | (0.45 | ) | $ | (0.92 | ) | ||||
Shares used in computing net loss per share: | ||||||||||||||||
Basic | 13,141 | 13,114 | 13,136 | 13,051 | ||||||||||||
Diluted | 13,141 | 13,114 | 13,136 | 13,051 | ||||||||||||
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS | |||||||
(amounts in thousands) | |||||||
Nine Months Ended |
|||||||
2020 | 2019 | ||||||
Cash flows from operating activities: | |||||||
Net (loss) income | $ | (5,883 | ) | $ | (12,052 | ) | |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||||||
Depreciation and amortization | 2,975 | 5,256 | |||||
Provision for bad debt | 321 | 198 | |||||
Provision for customer credits | 75 | 113 | |||||
Share-based compensation | 1,525 | 1,762 | |||||
Right-of-use assets | 1,107 | 1,306 | |||||
Lease Liabilities | (1,001 | ) | (1,309 | ) | |||
Gain on sale of investment | - | (250 | ) | ||||
Changes in assets and liabilities | |||||||
Accounts receivable | 9,072 | 3,940 | |||||
Prepaid expenses and other current assets | 120 | (164 | ) | ||||
Other non-current assets | (36 | ) | (280 | ) | |||
Accounts payable | (6,682 | ) | (3,348 | ) | |||
Accrued expenses and other current liabilities | (280 | ) | (2,006 | ) | |||
Net cash (used in) provided by operating activities | 1,313 | (6,834 | ) | ||||
Cash flows from investing activities: | |||||||
Purchases of property and equipment | (396 | ) | (1,330 | ) | |||
Proceeds from sale of investment | - | 250 | |||||
Net cash (used in) provided by investing activities | (396 | ) | (1,080 | ) | |||
Cash flows from financing activities: | |||||||
Borrowings under PNC credit facility | 28,564 | 46,740 | |||||
Payments under PNC credit facility | (32,308 | ) | (45,704 | ) | |||
Borrowings under CNC credit facility | 53,612 | - | |||||
Payments under CNC credit facility | (43,588 | ) | - | ||||
Borrowings under the PPP Loan | 1,384 | - | |||||
Payments on convertible note | - | (1,000 | ) | ||||
Proceeds from exercise of stock options | 74 | 408 | |||||
Payments under financing agreement | (29 | ) | - | ||||
Net cash provided by (used in) financing activities | 7,709 | 444 | |||||
Net increase in cash and cash equivalents and restricted cash | 8,626 | (7,470 | ) | ||||
Cash and cash equivalents and restricted cash at beginning of period | 5,946 | 13,600 | |||||
Cash and cash equivalents and restricted cash at end of period | $ | 14,572 | $ | 6,130 | |||
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | |||||||
Cash and cash equivalents at beginning of period | $ | 892 | $ | 13,600 | |||
Restricted cash at beginning of period | 5,054 | - | |||||
Cash and cash equivalents and restricted cash at beginning of period | $ | 5,946 | $ | 13,600 | |||
Cash and cash equivalents at end of period | $ | 11,270 | $ | 1,092 | |||
Restricted cash at end of period | $ | 3,302 | $ | 5,038 | |||
Cash and cash equivalents and restricted cash at end of period | $ | 14,572 | $ | 6,130 | |||
Supplemental disclosures of cash flow information: | |||||||
Cash paid for income taxes | $ | 1 | $ | 1 | |||
Cash refunds for income taxes | $ | 814 | $ | 124 | |||
Cash paid for interest | $ | 640 | $ | 101 | |||
Supplemental disclosure of non-cash financing activities: | |||||||
Right-of-use assets obtained in exchange for operating lease liabilities | $ | 1,535 | $ | - | |||
Purchase of fixed assets on account | $ | 142 | $ | - | |||
Financing for the purchase of fixed assets | $ | 120 | $ | - | |||
RECONCILIATION OF ADJUSTED EBITDA | |||||||||||
(Amounts in thousands) | |||||||||||
Three Months Ended | |||||||||||
2020 |
2020 |
2019 |
|||||||||
Net loss | $ | (448 | ) | $ | (1,374 | ) | $ | (1,739 | ) | ||
Depreciation and amortization | 698 | 1,066 | 1,747 | ||||||||
Interest income | (23 | ) | - | (22 | ) | ||||||
Interest expense | 256 | 205 | 231 | ||||||||
Other income (expense) | 10 | - | - | ||||||||
Income taxes | 33 | (34 | ) | 50 | |||||||
Non-cash stock compensation expense | 497 | 518 | 651 | ||||||||
Gain on government grant | - | (10 | ) | - | |||||||
Personnel Restructuring | - | - | 185 | ||||||||
Gain/loss on sale of asset | - | - | (11 | ) | |||||||
Gain/loss on investment | - | - | (250 | ) | |||||||
Adjusted EBITDA | $ | 1,023 | $ | 371 | $ | 842 | |||||
Source: AutoWeb, Inc.