Autoweb Inc (AUTO) 2003 Q3 法說會逐字稿

Good afternoon, my name is Stacy and I will be your conference facilitator today. At this time, I would like to welcome everyone to Autobytel's earnings conference call for the third quarter of the fiscal year 2003. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press star, then the number one, on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I will now turn the call over to Mr. Hoshi Printer, Chief Financial Officer of Autobytel.

Sir, you may begin your conference.

Thank you, Stacy. Good afternoon and thank you for joining us today to discuss Autobytel's earnings for the third quarter of fiscal year 2003. With me is Jeffrey Schwartz, President and CEO of Autobytel. We will begin with highlights of the quarter and a review of the financials. Jeffrey will discuss the business, and then we will open up the call for questions.

Today's conference call, including the question and period, projections, and other forward-looking statements regarding future events and the future financial performance of the company are covered by the safe harbor statement contained in today's press release. We would like to caution you that actual events and results may differ materially from those forward-looking statements. We refer you to documents that company has filed with the SEC including the Form 10-K for the year ended December 31, 2002 and the Form 10-Qs filed to date. These document identify the principal factors that will cause results to differ martially from those forward-looking statements. With that I would like to turn the call to Jeffrey.

Thank you Hoshi, and welcome to all Autobytel's third quarter conference call. I am pleased to report continued progress in the financial performance of the company, today we report Q3 revenue of $23 million and net income of $1.7 million or 4 cents per share. During the quarter revenue increased 6% sequentially and net income increased 48% sequentially. Said differently, we grew the business $1.3 million quarter-to-quarter and 41% of these increase, or $550,000, flow through to the bottom line. These results further demonstrate the unique leverage and financial benefits of our business.

We closed the quarter with $59 million of cash on hand and no debt. We generated over $3 million in cash from operations and added about $4 million in cash through stock option redemption and a return of capital for the year, bringing total cash generation during the quarter to over to $7 million. The continued cash activity of the business remains a high point Hoshi will review the financial in greater detail, before he does I would like to review a few key operation highlights and set the stage for later comments regarding your lower margin environment.

Operationally, we made some important strives during the quarter. For the first time in two years we added program dealers on a net basis, as our lower sequentially from 13% in Q2 to 8% in Q3 its lowest point in two years. We believe that Q3 represents the cross over point in our core business, for the past two years our strategy has been focused on making each customer relationship profitable.

During that time average revenue for purchase request has gone from $16 to $24 and gross profit for request has gone from $9 to $16. We have set considerable time and resources to support this pricing in the market place by investing in sales, support, technology, and product quality. Our strategy is paying off, we have know have all pieces in place to grow the core business profitably and we believe that this will contribute to our financial and operating results moving forward.

Our other product lines remain healthy contributors to he results we are referring to day. Year-over-year advertising about 38%, our enterprise business in up 81% and our CRM business has more than triple. These products today represented about 25% of revenue and we believe their growth prospects are quite significant.

In terms of the overall market environment things continue to look strong. According to the recently released GD power study continues about in the Automotive Internet in record numbers. A full 10% of all car's sales are now initiated on line and 21% of car buyers said that the Internet impacted with the choose of dealers up from 14% in 2002.

Today almost half of Autobytel's model decisions are impacted by informations selled on the Internet. Up from 40% a year ago and 78% of our car buyers under the age of 40 research Automotive information on line.

I will review the recent findings in greater detail but the prices to say the market trend we have been monitoring for some time are beginning to accelerate, driven by increased online tenure the generational effect of younger more web study car buyers replacing older buyers and increased internet adoption. After Hoshi reviews the financials, I will discuss these and other trends in the business. Hoshi.

Thank you Jeffrey. We are pleased to report that this is our fourth consecutive quarter of increasing net income and the fifth consecutive quarter of cash generation. Net income increased to $1.7 million or $0.04 a share, a sequential increase of 48%. This also represents a net margin of 7% this quarter versus 5% in Q2, and 4% in Q1.

Cash generation from operations were $3.3 million consistent with the indication we gave you in the last earnings call. Let me begin the financial discussion with cash. We started our third quarter with $51.7 million in cash, generated $7.2 million and ended the quarter with a balance of $58.9 million. Of the $7.2 million, $3.3 million came from operations, a 45% increase compared to $2.3 million in Q2. We received $2.2 million of cash as a partial return of the company's investment in the European operations. We may see additional cash from the European operations at some future date.

Because of the increase in the stock price, the options exercised by current and former employees generated another $2.3 millions in cash, compared to very nominal amounts in prior quarters. And finally, we used $600,000 in capital expenditures compared to radically nominal amounts this year. In the last conference call I indicated that we expected the fully diluted share count to be about $39.5 million. Because of the movement in the stock price, that number was $40.9 million for Q3. Our best guidance at this time is to use $42.2 million for the next two quarters for modelling EPS. Revenues for the quarter were $23 million, a 6% sequential increase from $21.7 million in Q2, and the highest revenue in the history of the company.

Consistent with the second quarter earnings call I will discuss the revenue in four areas, lead referrals advertising, CRM and data products and services. Let me begin with the lead referral, which comprised about 68% of the total revenues in Q3. During the quarter revenue from the lead reserve business increased from $15.5 million in Q2 to $15.7 million in Q3. In the third quarter, there were 19.1 million visitors to our sites versus 19.9 million in Q2 and about 1.1 million consumers submitted their process requests to us. About 20% of the requests were eliminated, as a result of our quality control campaign. Another 74,000 requests could not be fulfilled because we did not have a dealer in that area.

This was an improvement over the 77,000 unfulfilled requests in the second quarter as we increased our dealer relationships. As a result, we sent 763,000 requests to the dealers, we focussed on the client versus Q2. Jeffrey will explain the reasons for the decline but we believe it was primarily because of model year change over occurring in late August and September. Of these 763,000 requests, 72% of 547,000 was sent to the retail channel. The remaining 216,000 request was sent to orients or to major dealer groups such as auto-nation

Let me now discuss the matrix on the purchase request that we sent to the retail network. The revenues of our request increased out about $1 of 4% sequentially from a $23.50 to $24.50. The average monthly deal of these remains the at $888 verses Q2, because the higher revenue per lead, was offset by lower volume of purchase request. From our profitability stand point, we are pleased by the growth margin from the purchase request increased sequentially by 8% to $16.45 in Q3, verses $15.15 in Q2.

In the last call I mentioned that we are realigning the sales force and expending it, so we could have far more frequent contacts with our dealers. We added about 25 new sales people and the realignment proceeded very smoothly. The additions to the sales force, toughened with quality and several other initiatives we have instituted over the last 12 months resulted result in the most significant achievement in the program free area.

Namely that the program dealer relationship count turn thousand for the first time in two years, and we added a net 89 dealer relationship. For the currently the program dealer churn (ph) rate for third quarter was at 8%, the lowest in the last two years. The Quarterly churn rate in fiscal year 2002, was about 15%, and in product calls we have outlined our intense to cut that shown rate in half. As the Q3 results indicated we have made substantial progress in that direction. Our near term forecast is that we should continue to add program dealer relationship on a net basis. The 15,700 enterprise sale relationships that we have continued to be strong with a high degree of satisfaction with quality of the purchase request that we have sent them.

Turning to web site advertising which comprise 12% of total revenue's in Q3. The 4% decline in purchase request also caused a reduction of volume of page news available to the orients, resulting in a revenue decline from $3 million in Q2 to $2.8 million in Q3. The third area of revenue CRM tools and services which includes RPM and AVV products. CRM revenues now comprise 14% of the business. We acquired AVV in June so that Q3 included the full quarter of AVV revenues. The total CRM revenue register growth of 53% from $2.1 million in Q2 to $3.2 million in Q3, and 10% growth on a Performa basis. The AVV portion of the revenue increased by 11% sequentially. Our PM revenue continues to increase and grew sequentially by 23% and $90 indications to you.

It is expected to grow between 15 and 20% in Q4. We added a net of 57-RPM dealers so that at the end of the third quarter we had 337 dealers. The balance of the revenue of about 6% came from data services and other products. This revenue stream increased 30% sequentially from $1.1 million in Q2 $1.4 in Q3. The principal reason is that we have regained the momentum in AIC after its relocation to er vine. Now turning to expenses overall expenses including deprecations and amortization, increased from $20.7 million in Q2 to $21.5 million in Q3 reflecting the full quarter of AVV expenses. Completion of the AIC relocation from (inaudible) to Oreland. And partials cause of safety alignments.

We expect that future expenses, could be 1 to 2% higher then in Q3. Regarding the head count, we added a net of 17 people during the quarter, increasing the sales force, reducing overhead and AIC and ended the quarter at $334. resilation of ADB and Oreland work forces started in the third quarter to migrate capabilities and competences at the appropriate location. Now to capital expenditures in the last earnings call I indicated that we expect to spend about $1.1 million in the second half, much of which for AVV integration. In Q3 CAPEX was $600,000 versus about $100,000 in Q2, and in line with our guidance. We expect to spend about $0.5 million in Q4 as we continue the integration.

Depreciation and atomization increased some $620,000 in Q2 to $672,000 in Q3. We expect that DNA will be in the $750,000 range going forward. DSO decreased from 35 days in Q2 to 33 days in Q3, well within the range expectable DSO level. In Summary I would like to relate and update the second half of 2003 guidance that we provided last quarter which was A -- expect the fiscal year 2003 at a $95 million revenue run rate. B -- second half net income is expected to increase over 75% versus the first half, which is an increase of prior guidance, and C the net cash provided by operation is expected increase in the second half of the year, compared to the first half. For 2004, we will provide fuller guidance at the next quarters call. In the mean time we have to give you an indication of the leverage in the business model. The net margin in that third quarter was 7% and management goal is to double the margin as we move forward into the next year. Jeffrey will now highlight key business trends and update you on the business strategy Jeffrey.

Thank you hoshi. As you can see we continue to make quarterly progress in the financial performance of the business. This is our fifth consecutive quarter positive cash flow and our fourth consecutive quarter of delivering increased net income, so we are pleased with consistency of our results and the unique leverage in the business. The market is developing and our operations are clearly improving. Let me briefly reinforce a few key trends during the quarter. In our car business we continued to see pricing and margin expansion as our quality sales and support initiatives so called. During the quarter, revenue per purchase request increased sequentially 4%, and gross profit per request increased sequentially 9%.

Our dealer's sales close rate remains strong in the 17% range, and we feel that we are delivering additional value to our customers to increase sales and support. As Automotive Internet option takes all we see additional pricing opportunity in the market place. As a remainder cost per sale in Autobytel is still tracking below $150 less than 1/3 were dew expense on radio present television disorder car. So as marketing dollars are reallocated our product continues to be track of alternatives to traditional media.

During the quarter we added program dealers onto net basis, we added 500 programs dealer relationships and 40% for that turning customers. This refocuses my belief that when dealers are making assiments about their marketing partners, they will seek coming back to join business with Autobytel.

A quarter we terminate which committed 8%, which of 40% improvement from last quarter. We expect to be end of sustain and improve on this performance going forward. We continue to make progress on the used car side of the business and remained on track to double this area over the next four quarters. Then up the market opportunities in this category is significant, before 40 million used cars sold each year.

We believe that we have some key competitive advantages in dressing this market opportunity. Including low cost per sale, dealer and consumer as of use and large in stall basis dealers, a highly regarded brand at automotive retail, and improving sale model.

During the quarter we experienced some seasonality in the Automotive Internet with purchase request down sequentially 4%. We have seen this trend in the past 7 years of the business, some consumers differ purchases as the new model approaches and specifics to the Internet, I mean a new model vehicles are not yet available online, as manufactures in the bar do their data billed conciliation.

In the September, for example we have over $7 million unique visitors to our sites. Second, only the eDay there are shops to buy conversion late decrease because certain new models were not yet available online, we believe that this trend will reverse it self during the third quarter. The same had an effect on advertising with revenues down about 200,000. Our CPM's on the remain strong in the $37 range we remain quite optimistic about this area of the business as we move into the 2004 and beyond.

Specially in light of recent studies showing that the Internet now has a stronger influence on consumer vehicle choices then both Television and new paper classifieds. Our CRM business continued progress during the quarter drilling it over 50% sequentially.

In the ADV business, our sales force in having success expanding in existing on line Tele counts, which also has increasing customer fitness in our core business. We added about 125 dealers net in this area during the quarter. In terms of product mix, we are having increasing sales success we our higher range CRM packages.

The progress we made during the integration of ADV has improved the performance of the application, allowing us to increase sales in these higher ends more linked with areas.

In the RMP business, we remain focused in our product adding accounts. This business is going over 20% sequentially, which is great that we believe that even more growth in the core with increase OEM at he inter group adoption. We are focused on and optimistic about this out side opportunity. Our data and applications business also had a good quarter scoring wins with Ford and link and Mertury(ph) and key customer renewal and expansions with the liexus prime pricer marked as we saw in Honda.

We are pleased with the study improvement we are making in each area of the business and remain encouraged by the overall market opportunity, which is beginning to develop at a more rapid rate. You see the early signs of this development in the results we are reporting today and it has recently be further confirmed by a series of reports in industry annuals.

According to a recent study, today the internet influences 50% of all make model decisions, up from 40% last year and 21% of all viewer selection decisions, up from 14% last year. Clearly, more buyers are moving deeper to the purchase process while still online and the internet is influencing their product, price and place decisions accordingly. There are clear trends in the state that augur well for the future of the market opportunity generally and the Autobytel business in particular.

For example, 78 % of new vehicle buyers under the age of 40 are automotive Internet users versus the over 60 cover which runs exactly half of that was 39%. And because internet usage rates are highly correlated with age and tenure, the rates of new vehicle buyers having access to the internet being automotive internet users and basing vehicle purchase decisions on internet data, will not only increase over time but will also increase in course of time. Notably, this year the internet has surpassed newspaper classifieds as the source of information consumers use to locate the dealer from a state purchase. This cross over point has been anticipated and is only reinforced by a recent capgem (ph) you study that measures the impact different media had on automotive purchase decisions

Even though automotive manufacturers spend about $16 billion on television each year representing roughly 12% of total network advertising and 20% of the stock market, television influenced only 17% of car-buying decisions, while the internet influenced 26%. We implied that the study to conclude quote "we think that manufacturers and the dealers are wasting money on broad-based TV advertising instead of a direct marketing approach." So, the headlines here is that the world is slowly turning our way. With 2% of total automotive marketing dollars in our line, we have a lot of them set in this point forward. I will remind you that many analysts believe this market will be a $2 billion opportunity in three or five years while placing both online travel and financial services.

We continue to believe that we are uniquely positioned to benefit from these accelerating marketing trends. For millions of consumers, Autobytel remains the number one automotive buying site, the destination of choice to help them research and buy their car, eliminates hassle and save money. For thousands of viewers, Autobytel is a trusted marketing partner delivering our compelling cost per sale and easy to use tools to effectively manage their marketing programs. And for nearly every automotive manufacturer Autobytel is the place where they can connect with consumers at that golden moment when there are deciding which car or truck to buy.

Our competitive advantages, which include a strong consumer and automotive retail brand, best in class automotive concept, viewer distribution and reach, and supporting CRM applications uniquely position us for the growth of a continuous market. We have spent 8 years and several $100 million to develop our position in this business. The advantages of being the first entrant and the market leader are reinforced to me as others struggle with the complexities of creating a growing and profitable business in this area. Last quarter, Autobytel generated over $3.3 billion in gross market sales for our customers. That level of insurance and productivity is not easily replicated one quick note about acquisitions.

I've told you in the past that we remain focused on making prudent acquisitions to extend our market share and reach across the automotive marketing landscape. We believe that there are a number of very attractive acquisition opportunities in the current market environment and we continue to diligently pursue a disciplined evaluation of each of those opportunities. As we have said before, we remain committed to pursuing strategic and financially creative transactions. Overall, I feel great about the quarter and optimistic that next year will be one of continued revenue and earnings growth for the company. I thank you for your support and look forward to answering any questions you might ask. Operator we can now open the lines for questions.

[operator instructions] Your first question comes from Mike Crawford of B. Riley & Co.

Jeff about New York operation I guess had some surprise about operating leverage and I think the numbers that you are showing there are little bit higher than what you're guiding to now and also did I hear Hoshi right saying that you're trying you think that you can get there what is it, net income margin from 7% to 14% next year?

Yes I think we're directionally talking about you know, this is our formal guidance. I think we'll come out more formally in January Michael but we think that we can double that income margin next year which I think is consistent with the presentation that we gave you.

And then could you just put it in more plain English regarding the Q4 guidance instead of jumping to some puzzle on what axing into the $95 million right for the second and just you know first quarter. What does that translate to that kind of jump up guidance this year?

Yes Mike this is Hoshi. I find I've jumbled it for you. What we are saying is that Q4 will be about between $23.5 million to $24 million. That's what we are looking at. When you look at $95 million excess run rate. That's what we are talking about.

OK, great. And then the RPM, looks like your churning about 4% of those already, is that true, because I think you had some 290 something, the?

We went from 280 to 337 so we added 57 dealers. We had 280 at the end of Q2 and 337 at the end of Q3.

OK I guess I got 292, I guess that was almost 280 .OK and what was the AVV revenue during this quarter and did that show up in others?

No, two different questions. First of all we are to open out AVV value but I did give you a sense of what the AVV value sequential increase was on a pro-forma basis if you considered Q2 as a whole, then Q2 for AVV it 11% increase. But it does give you a sense, it is approximately $1.5 to $2 million a quarter.

And what is that show up -- ?

It's show in three buckets, in shows up in program fees, it shows up in enterprise, and it shows up in other because in depends on were the ADV products are placed.

OK. Thank you.

Thanks Mike.

Your next question comes from Justin Mortis (ph) of W.P.G. Forbour (ph).

First question on the revenues that seasonality of the program fees you mentioned that, the average I guess that you generated last quarter, into the September quarter, what does it look like the average is going into the first quarter, like what's the sequential increase?

Justin, this is Jeffrey. The -- We are looked at the seven years of the pervious business and provide seven years August till September it is been down any where between 5% and 14% and if you look at the average of the fourth quarter at the last seven years and it is typically up by 5%.

Go ahead.

Yes so just to explain the phenomenon that half of is that, as model yours change over as Jeff said, the manufactures we collect a lot of price in form 47 manufactures and about 40% of those manufacturers involved with your data and do that for number of reasons, first they want the '04 models to arrive at the showroom and second, they don't to - they want to incentive to provide the '03s. So, what happens in the automotive Internet during those two months typically doesn't pay, the business comes down a bit and then because the data becomes rather dull because the business get contracted in October, November and we already see that in October the business is coming back.

So you've already seen some seasonality trend back for October?

Yes.

And so that would also be a positive of advertising as well?

Yes. I think it should be because the way the advertising business runs is that the most valuable pagers for the automotive manufacturers are the highly targeted configuration pages make model pages, and as you generate fewer purchase requires, you generate fewer configuration like model pages and as a result you know you get less than advertising.

And then on the enterprise deal. How much do you expect that to sort of sequentially increase. I mean is there some attraction that you know you guys are starting to see if you look at little bit more or is that going to accelerate or how do you do that?

Justin this is Hoshi. In Q4 we definitely see an increased sequential increase, it may not be as high as it was in Q3 versus Q2 but certainly there will be an increase in Q4 versus Q3.

And when do you set the sales for guys who really traction. So you think it's more of a December event or are they already pretty able to show results earlier?

Justin, I think they are already showing results and their first few months out there had been incredible impressive to me and we had them back in the office for more training, and as they get more training on automotive products, you know they will be able to som how of the products sales. I think it should pick up throughout the third quarter, and really by the time we begin the first quarter next year we should have fresh action.

Thank you.

Your next question comes from Andrew Ladhe of Roth Capital Partners.

Hi Andrew how are you?

Good how are you?

Doing well thank you.

Got just a few questions and I think you might have answered this in your comments but I did add revenue scale sequentially. Actually you just pushed on your team thatback to have been from the lower order. My question is where are the CPM do you have any other explanation for add revenue colon.

Yes I will go through the explanation again Andrew. As we had fewer purchase requests during the quarter we generated fewer configuration pages because something ordered to generate our purchase request to the consumer as to configure their part. So those deeply targeted make model pages or the pages with the higher CPM and they are the most disable to our advertising customers so we have thirty thousand fewer purchase request, which meant that we generated fewer make models. Pages which as a result also brought CPM down by a $1.75 to about $38. So it's a its sought of they all work together Andrew.

It seems like the price for the CPM for that target in models. Were they targeted advertising which is so much higher than -- ? CPM should have come down more --

Yes on a relative base make model pages at the percentage of total page views right form 53% to 49%. So that in essence is the pricing effect because to make models pages are the most highly valued pages, so as the make model pages came down as a percentage of total page views. When the CPM went from $39 .84 to $37.96 and that is you know some thing that we - I mean that we understand it and we think that it's a pattern that will change in the fourth quarter.

Ok, did you see it $7 million in x in the month of --

Yes $7.1 million in the month of September.

Ok you should have taken only to Amazon.

In terms of total caps in number one auto buying side overall, but in terms of total automotive traffic second to EBAY.

I'm sorry -- Yes, and you happen to have trend in month were I guess quarterly our sales will be better please talked about that.

Yes I do the seasonally adjusted annual rate of sales in Q3 was $17.7 million, as compared to last year third quarter was $17.6 million.

Thank you.

Thanks Andrew.

Your next question comes form Richard Fetyko of Kaufman Brothers.

Hai guys.

Richard how are you ?

Just a couple of house keeping questions I missed the number of purchase request that you scribed out of the system in the third quarter.

Yes OK, this is Hoshi so let me give that number here. We scribed out the last 20% of the request, so we scribed out about 200,000.

And unfold sold were --

Unfold sold were 74,000.

So slightly down from the second quarter?

Slight improvement.

Right.

Printer: Ammonetization is just simply a function of the fact that we are not adding dealers back to the program base.

Right we would expect that that turn in that direction. The number of quiz (ph) requests that you screened out they're increased. Have you tightened the screws on the quality process and also price that goes to it?

Yes they are all related. Our close rate went from 17 to 17.5% during the quarter and our average revenue for purchase request went from 2,350, that is basically 2,450. Basically what we get is we launched a new level of (inaudible) in the quarter which is a live call center and that was able to pick out some bad requests as well. So, it's consistent with the previous efforts to drive close rates and drive pricing and margin.

Got you. I was also wondering if you could go over the seasonality threat, it may be a good time to revisit that. How does it usual trend in the fourth quarter and first quarter, second quarter and so on?

OK I'll review it at a higher level. The seasonably weak quarter in the automotive marketing world is the third quarter. It ticks up in October and November and then is seasonally weak between thanksgiving and December and then it really grows steadily from January to July. So, you can see I think pretty steady growth January and July, August and September tail off and then October and November build back.

Very good. Also the churn attrition can go up there because it's a major mass for you guys. What do you expect in terms of additions, I mean you added about 80 or so I think in the quarter. How many sales people do you have right now working on instead of adding new deals to the program?

We have about 45 in the field and about another 20, 25 and self support inside. I think it's a huge accomplishment for us. You know we've been working on this for two years and really focused on as you said pricing and margin and making sure that each customer relationship is profitable. So, it's a huge milestone for us to add about a 100 dealers. The answer to your question is we expect to improve on that with each successive quarter. You know the expectation is that we can keep the churn rate where it is or over decrease it over time. But, you know the expectation is that we can go a 100, 200, something of that nature.

And out of the dealers that continue to churn off, what's the primaries in the margin. Is there sort of a - what are the reasons?

It's pretty consistent. It has been for a long time. Sort of a - what we call meaning that the franchise is stopped or sold or simply goes away and a third of them say process issues and staffing issues and budget issues and (inaudible) operation and then a third of them categorize the program is not having a return on investments and of course a lot of you are confounded, right because else if they don't have a process or technology in place and they 're all alone and the program is not really effective. So, that's a pretty stable bucketing of the reasons for cancellation Richard.

Thank you very much.

Yes sir.

[operator instructions] Your next question comes from Frank Christina (ph) (inaudible) partner.

Thanks guy's nice quarter continuing to revenue growth and specially congratulations on having program dealers and net program dealers.

Thanks mate.

Could you tell us somewhat about sales force could you may be explain you know where this sales people came from are they soft are they automotive may be give a average sort of experience in sales and then may be tell me how long they have been Autobytel so we can get an idea where they are and there learning curve and then also if you could just expand a little bit on your on your recent announcement with forward (inaudible) noted that was one the may that you didn't power with AIC and where does that leave you to go because by my count you have of the makes and models you own on those website reached in North America in terms comparative engines thanks.

Yes. Thanks for the question Frank. The question about the experience of the sales people the senior sales most senior sales people in the market, average sales experienced I would say is just 10 to 15 years most have high level automotive experience over level software sales experience those groups of people are managing a (inaudible) accounts for second group is the account management group there's about 25 of those folks, they have a obviously less experience in the 3 to 5 year range very internet (inaudible) of people some automotive experience some software sales and some just traditional sales experience but the qualification or requirement to be successful there is just being aggressive (inaudible) in getting into see the customers accounts.

Spokesmen side the sales spokesmen side has a typically 3 to 5 years of telephone type sales experience and I tell you that group has done just a absolutely terrific job for our (inaudible) they have been often running for about 3 or 4 months now and they can continue to impress in supplies yes they are doing a great job.

As regards to the Ford announcement yes we are very happy about it I think you will see us continue to make some announcement with some majority on our accounts the opportunity Frank to continue to extend those relationships where we'll might be doing the competitive comparison (inaudible) to get that business globally to get that business in the Spanish language in U.S.A to get the consideration business to continue the license (inaudible) expend and jurisdictional marketing programs so with really at a limited amount of opportunity with these accounts and its just understanding needs and making sure we have stock to service them.

Ok can I ask one more question regarding them? The success with the program dealers is there some thing different about the products from say year ago with the price so you are doing sort of contract are you doing (inaudible) deal which are supposed to subscriptions?

No actually we are actually the its quality (inaudible) we are actually working all of our deals now in the 6 month or the year contract so today probably 60% to 75% of our new accounts we are six month contract and last year this time we are signing a month in absence with 30 day contracts.

So, really think it's quality, I mean the quality has been hugely improved. Well we have a much more visible on effective sales force in support organization touching the dealers and making smooth their factors, and I can't under estimate the importance of AZZ and making sure that we are getting most towards in that hands of our dealers. And that is the difference in many cases between the dealer becoming successful and not having success having that sales automation tool and now we do have the best tool in the industry and being ever last being get our dealers on that programmers is really going to pay huge dividend moving forward.

Thank you.

At this time there are no further questions. Gentleman are there any closing remark.

Well thank you for all of you attending. We will speak with you soon. Bye bye. Thank you very much.

this concludes the Autobytel earnings conference call for the third quarter at the fiscal year 2003. You may now disconnect.