使用警語:中文譯文來源為 Google 翻譯,僅供參考,實際內容請以英文原文為主
Operator
Hello, my name is Dawn and I will be your conference operator today. At this time, I would like to welcome everyone to the Autobytel announces 2009 year end financial results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. (Operator instructions.) I will now turn the call over to Roger Pondel, Investor Relations. Please go ahead.
Roger Pondel - IR
Thank you, Dawn. Good afternoon, everyone, and welcome to Autobytel's 2009 fourth quarter and yearend conference call. With me on the line today are Jeff Coats, President and Chief Executive Officer, and Curt DeWalt, Chief Financial Officer.
Before we begin, I'd like to remind you that during today's call, including the Q&A session, any projections and forward-looking statements made regarding future events and the future financial performance of the Company are covered by the safe harbor statement contained in today's press release and in the Company's public filings with the SEC.
Please note that actual events or results may differ materially from these forward-looking statements. Specifically, please refer to the Form 10-Q for the quarter ended September 30, 2009, the Form 10-K for the year ended December 31, 2008, and Form 10-K for the year ended December 31, 2009 which is expected to be filed next week. These filings address factors and risks that could cause results to differ materially from those forward-looking statements.
Slides are included with today's presentation to help illustrate some of the points being made and discussed during the call. You can access them in the Investor Relations section of Autobytel's website at www.autobytel.com. When you're there, go to Investor Relations and then under News and Events, click on Presentations. I will now turn the call over to Jeff.
Jeff Coats - President and Chief Executive Officer
Thank you, Roger. Good afternoon, everyone. For Autobytel, 2009 was a year characterized by reinvestment and refocus. We better aligned our business for current industry dynamics and built a solid foundation from which we believe we can achieve our goals of top line growth and profitability. Against what turned out to be one of the worst automotive markets in almost half a century, we shifted our focus back to our core lead generation business and identified ways to provide increasing value to automakers and auto dealers to help them market and sell new and used vehicles.
I am pleased on February 10th we received a letter from the NASDAQ stock market notifying us that we have regained compliance with the previously reported minimum $1 closing bid deficiency and that the matter is now closed. We consider this an important milestone in Autobytel's turnaround story.
Ongoing efforts to improve our websites by integrating data and content acquired as a result of our patent settlements, new partnerships we've developed in recent months, and investments in talent to improve website operations and search engine marketing are contributing to our considerable progress in improving lead quality and increasing internally generated leads.
As expected, while revenues remain under pressure in the short term, gross margin improved by approximately 400 basis points in the fourth quarter of 2009 on top of 200 basis points gain in the third quarter. By working more efficiently, we reduced operating costs by an additional 4.8% on a sequential basis. Thus we achieved significant gross margin improvement, substantially streamlined our cost structure, see signs of improvement in our dealer network, and in the last two months of the year generated positive cash flow.
While our industry struggled throughout 2009, our foresight to maintain a strong cash position, invest strategically when warranted, and reduce spending where ROI hurdles were not being met, helped us end the year with $25.1 million in cash. We also remain debt free.
With the general economy now showing early signs of recovery and the auto industry starting to generate some positive momentum, our strong balance sheet will allow us to take advantage of opportunities as they present themselves, especially as our auto industry customers begin to benefit from an improving sales environment. By way of example, as shown on slide three, in December, 2009, US new light vehicle sales improved by 15% on a year over year basis and in January of this year sales growth was 6% year over year.
While we obviously are not out of the woods, there is definitely some evidence to suggest that the worst may be behind us. Now I'd like to turn things over to Curt who will provide a detailed review of our fourth quarter and full year results. Curt?
Curt DeWalt - Chief Financial Officer
Thank you, Jeff. Before I begin, please note my comparisons to prior year Q4 results exclude the impact of $5.1 million of severance costs and $5.5 million of noncash impairment charges recognized in that quarter. We believe this provides a more representative depiction of our year over year performance. You can find a detailed review of our GAAP results for 2008 Q4 and full year in the earnings release we distributed earlier this afternoon as well as the slides we have posted to our website that were mentioned at the beginning of this call.
As shown on slide four, total revenues for the Q4 were $12.2 million, down approximately 9% from $13.4 million for 2009 Q3, related in part to the normal seasonal trends as well as Cash for Clunkers program which pulled demand forward into Q3 and then resulted in lower fourth quarter dealer inventory, and down 14% year over year.
The reduction in 2008 fourth quarter relates to general economic and automotive sector weaknesses which also tracks to overall 2009 auto sales being down approximately 21%.
As you know, the automotive sector struggled considerably throughout 2009 as dealers went out of business and many of those that remained reduced or stopped spending marketing dollars. As a result, our network of dealer revenue declined throughout the year. However, we did begin to see signs of improvement late in the fourth quarter.
Total auto lead revenue was off 7% from Q3 of this and declined 7% from the prior year Q4 due principally to a reduction in the number of participating dealers for the reasons previously noted. Revenue generated from new and used retail dealers declined by 14% from Q3, 2009 and by 16% compared to Q4, 2008. Wholesale OEM lead delivery was the bright spot during the year, even though we were negatively impacted by the General Motors and Chrysler bankruptcies. In the fourth quarter OEM leads were up 10% over the previous third quarter and up 30% compared to Q4, 2008. As dealerships struggled, OEMs have become more active participants in the lead marketplace and we plan to continue to leverage this opportunity for future growth.
At the end of 2009 fourth quarter we were serving 2,064 new car franchises, up from 2,021 in Q3 of 2009 but down from 2,651 in the prior year period. Our used car dealer franchises totaled 924 at the end of 2009 Q4, roughly flat with 923 at the end of Q3 2009, but down from 1,106 in Q4, 2008. Finance lead revenue was off 13% from Q3 of this year and declined 39% from the prior year Q4 due principally to a reduction in the number of participating dealers and a decrease in revenue per participating dealer as obtaining financing for subprime consumers has been difficult by any historical standards.
We don't expect to see a significant change in these dynamics in the near term. However, anecdotal evidence from Automotive News suggests that things are just beginning to loosen credit guidelines, making it a bit easier for subprime buyers to purchase vehicles again.
We delivered approximately 76,000 finance leads in 2009 Q4, 12% lower than in Q3, 2009 and 25% lower than in last year's Q4. Finance dealer franchises totaled 221 at the end of 2009 Q4 compared with 186 at the end of 2009 Q3 and up from 214 in 2008 Q4.
Q4 advertising revenue declined 13% from 2009 Q3 and declined 25% from last year's Q4. The decline in sequential advertising revenue is due to seasonality and a high number of page views experienced in Q3 of 2009 related to the Cash for Clunkers program, while the year over year decrease is related to the lower number of page views principally due to the elimination of certain third party traffic providers.
In 2009 we undertook efforts to improve the quality of the traffic by eliminating underperforming traffic sources. While this resulted in fewer page views, the performance of our advertising has improved. We believe we should be able to leverage this higher performance to secure OEMs in other auto related categories who are currently not advertising on our site and to eventually obtain higher advertising rates across the board in recognition of a more competitive marketing product.
There were approximately 32 million total web page views across the Internet properties in 2009 Q4, down 33% from 48 million in Q3 2009 and 37 million in the year ago period. The sequential decrease is again primarily related to a significant number of page views related to Cash for Clunkers in Q3 as well as the elimination of certain third party traffic sources. The year over year decline related to a greater focus on lead generation from our own websites versus driving increased page views as well as the elimination of certain third party providers.
Slide five illustrates the quarterly revenue by product line over the last two years. In the current quarter, we delivered approximately 664,000 auto leads compared with 675,000 in the prior quarter and 652,000 in last year's Q4. The sequential decline in lead delivery was the result of pull forward in customer demand generated by Cash for Clunkers program in the third quarter and seasonal follow up. On a year over year basis, the increase is due to a greater number of leads delivered directly to OEMs and through our wholesale network, partially offset by lower lead delivery to individual dealers.
Gross margins also benefited from increased number of internally generated leads and was 39.1% in 2009 Q4, up from 35.5% in Q3 of this year and 32.2% in Q4 of last year excluding severance costs and goodwill impairment which we took in that quarter. In Q4 2009 we also benefited from the realization of previously recorded advertising revenue.
Slide six clearly illustrates our substantial cost structure improvements over the past year. Operating expenses declined by another 4.8% to $5.9 million from $6.2 million from the preceding third quarter and by approximately 36% from the prior year period. Last year's fourth quarter total operating expenses were $9.2 million excluding severance charges and goodwill impairment. Noncash share based compensation in Q4 2009 was $319,000 down sharply from $979,000 in last year's Q4.
The net loss for 2009 Q4 was $970,000 or $0.02 per share, which included approximately $15,000 of income from discontinued operations primarily related to the final release of funds from the escrow account that we had established pursuant to the sale of our AVV business in January 2008. This represents a considerable improvement from the net loss of $4.5 million or $0.10 per share excluding severance costs and related impairment in Q4 2008
Before moving to the balance sheet, I'd like to take a moment to give you a brief overview of the full year's results as seen on slide seven. Revenue for 2009 totaled $52.9 million compared with $71.2 million for 2008. The net loss was $2.4 million or $0.05 per share for 2009 including $1.2 million of income from discontinued operations. For 2008 the net loss was $79.9 million or $1.81 per share including severance related costs of $6.9 million, noncash impairment charges totaling $57.6 million, and $4.4 million in income of discontinued operations. Excluding the severance costs and noncash impairment charges, the net loss for 2008 would have been $15.5 million or $0.35 per share.
Slide eight graphs the management of our cash to maintain flexibility in the current economic environment. We ended the year with slightly more than $25 million in cash and cash equivalents which equates to $0.56 per share. This was down just $142,000 from the third quarter and at the end of 2008, our cash and cash equivalent position was $27.4 million or $0.61 per share. And in March we expect to receive the final installment payment of $2.67 million in connection with a patent litigation settlement. Our balance sheet remains debt free.
The current ratio remained strong at 4.8:1 at the end of December 2009, up from 4.7:1 at the end of September and a solid improvement from 3.3:1 at the end of December 2008. While there was no impact on our net losses, on our balance sheet, on our cash flows for these periods, during the second and third quarters of 2009, the Company's income taxes were misstated. With the provision for income taxes from continuing operations higher than actually recorded and offsetting a like amount recorded in the provision for income taxes from discontinued operations. The corrections to these quarterly financials are summarized in the tables to our press release and will be reflected in our Form 10-K for the year ended December 31, 2009 which we expect to file next week.
With that, I'll now turn the call back to Jeff.
Jeff Coats - President and Chief Executive Officer
Thank you, Curt. We made steady and important progress throughout 2009, not only strengthening our brand and reputation in the marketplace but beginning to strategically invest in our future. I believe that we ended the year in a significantly stronger position than we entered 2009 and that we move into 2010 poised to return to top line growth and profitability. Autobytel has been delivering value to the auto industry for 15 years. In that time we've witnessed many changes. Some good, some not as good.
However, one thing has remained constant over that period of time, the Internet's ability to provide the most cost effective ROI driven performance based marketing opportunities available to the auto industry to sell more new and used vehicles. 70% of the 200 auto dealers we surveyed last month for Autobytel's 15th anniversary automotive Internet dealership survey, said they plan to increase their spending on Internet marketing in 2010. Only 4% said they would decrease spending, while the remainder said they would keep spending on a par with 2009. All dealers surveyed said that their Internet strategies have helped them through these challenging times.
Automotive News recently reports from the National Automobile Dealers Association Convention in Orlando, Florida that many dealers are forsaking other forms of advertising in favor of the Internet. One dealer noted that he has reduced his advertising cost per car to $125 from $300 by focusing on the Internet. Given what we know abut the industry's need to protect its bottom line, these results and stories come as no surprise.
For Autobytel, these dynamics provide us with a good backdrop against which to build on our greatest strengths, our OEM and dealer relationships and the products and services we provide them as well as our suite of popular websites which provide valuable, robust content to automotive consumers.
Autobytel is once again ahead of the curve in providing our industry and consumers with the tools they need, especially in a recovering economy. Over the past year, our web development team has brought significant functionality improvements to our suite of consumer facing websites. In addition to improving the functionality of our sites and increasing their relevance based on current consumer demand and purchasing patterns, we have made substantial progress in growing our internal lead generation capabilities. As a result, gross margin and the quality of our leads have improved significantly.
As highlighted on slide nine, over the last several months we also completed strategic agreements with a wide array of automotive related businesses. Building on our existing relationship with Kelley Blue Book, we are now providing Autobytel's millions of website users with KBB's used car valuation data as well as their award winning editorial content including current and historical auto reviews and advice articles.
In 2010 we will integrate additional KBB content including news and editorial, new car market prices, and their extensive video library. We are also providing consumers with vehicle reviews, comparison articles, and related content from Edmunds.com. Additionally, we have integrated Auto Data Solutions' best in class still image vehicle photography and comprehensive US vehicle pricing, regional incentive and specification data to enhance the information available on tour websites.
We also recently launched a new best in class configurator allowing consumers to quickly and easily build and price their vehicles online with current factory packages and options. In addition to incorporating tools and content from other topnotch automotive websites, we are regaining our own editorial voice and starting to give consumers a best of the web perspective. Time and again, end market car buyers have demonstrated the importance of the Internet to their vehicle purchase decision. In fact, according to a recent JD Power news release, 76% of new vehicle buyers now use the Internet in their shopping process, an historical high.
We are continuing to integrate this and other data, content, tools, photos, and graphics, and are working toward a re-launch of Autobytel.com with a new user interface and a voice in the third quarter of this year. During 2010, we anticipate that all of our sites will have undergone substantial improvements, paving the way for increased lead generation of our websites and optimized advertising performance. We intend to provide the most robust automotive experience anywhere on the web.
Slide ten highlights the considerable progress we've made in increasing leads generated on our websites which are generally among the highest quality. Since the first quarter of 2009, internally generated leads have grown by more than nine times and we expect to continue to grow that number in the quarters ahead as our website improvement activities take further hold.
In addition to a larger percentage of leads from our own sites, we are now powering vehicle and dealer searches on LendingTreeAutos.com, giving our dealers even more exposure to serious end market car buyers. To help keep the momentum going, we recently welcomed back Autobytel veteran Steve Lind as our EVP of Corporate Development. Steve is working to identify and integrate additional strategic partnerships.
Recently we rolled out an industry first lead product, iControl by Autobytel, to better meet the needs of our large dealer customers. iControl puts dealers in charge of their leads by allowing them to configure those leads by lead source, model, territory, or a combination of all three. Never before seen in the auto industry, iControl addresses something dealers have long been asking for, a way to match their lead mix to their inventory and local market conditions. This powerful platform is highly flexible, easy to use, and controllable from either the dealership or dealer group level. As anticipated, initial dealer response to iControl has been overwhelmingly positive.
At the same time, we are launching our quality advantage program which provides real time lead de-duplication from any source to remove the challenge and difficulties that duplicate leads can cause. As the only leads program in the industry to provide this capability, we are making it easier and more efficient for dealers to conduct business. We have come a very long way in a relatively short amount of time since refocusing our operations and concentrating on those activities that we believe will result in both short and long term value for our customers. We continue to work to help OEMs and dealers market and sell vehicles and to provide innovative Internet marketing solutions, keeping Autobytel a must-have tool in their efforts to generate and close consumer automotive leads in the most cost effective way possible.
We enter 2010 re-energized and feeling optimistic about the future with the most recent JD Power forecast indicating an improvement in new vehicle sales of 11.7 million, up 12.5% from 2009 and with an increase to 15 million in 2012. Over the coming year, we will continue to develop and innovate programs to provide value to automakers and dealers to help them sell more vehicles. We will enhance our websites with the industry's best content to provide increasing value to consumers who are increasingly using the Internet during the car buying process.
We will continue our efforts to run our operations as efficiently as possible to drive sustained profitability and grow shareholder value. As a result of our efforts, we believe we will be able to show continued improvements in our gross margin and achieve our goals of top line growth and profitability in 2010. We are convinced we are doing the right things to strengthen our position in the marketplace while using our financial flexibility to their utmost benefit. Even in this economy, because of it, strategic opportunities abound. As I mentioned in prior calls, the auto industry and its diverse segments are ripe for change and consolidation and we are well positioned to benefit from this and intend to.
I look forward to speaking with you again soon to report on our continuing process. Dawn, we'll now take questions.
Operator
(Operator Instructions). Brian Horey, Aurelian Management.
Brian Horey - Analyst
Thanks for taking my question. Congrats on some improved progress this quarter. Just a few questions. You noted I think you said some sign of improvement in the dealer network. Can you add a little bit of color to what you're seeing in terms of attracting additional dealers to the network?
Jeff Coats - President and Chief Executive Officer
Well, it's always a mixed bag. As part of introducing some new products, iControl in particular, we are seeing increased dealer interest. And a large part of what keeps dealers in our network or coming into our network is our ability to send them high quality, good close rate leads. The fact that we are now focusing or refocusing our efforts on generating more leads internally off of our own sites, which again generally are among the best quality, is a big plus for us. It's a big selling point for dealers as well.
Brian Horey - Analyst
But do you have any sense as to how much upside there is in the dealer count over the next two quarters?
Jeff Coats - President and Chief Executive Officer
Well, it's kind of difficult to prognosticate on that. With the dealer count around 2,000 out of a universe of something around 15,000 or 16,000, we believe that there is some upside here. Just a few years ago, we were more than double where we are now. So I think as a result, again, of refocusing our efforts on our lead generation and our lead business, we'll see an improvement in the dealer count. Obviously an improvement in the dealer count is a top priority for us since it is a prime driver of our revenue.
Brian Horey - Analyst
Right. The OpEx was down a little bit more this quarter which is nice to see. Can you talk about where you found the incremental efficiencies in terms of OpEx?
Curt DeWalt - Chief Financial Officer
Yes. Again, it's a number of things. We have -- as contracts come up, I'll pick insurance premiums. We had, at the beginning of the year, we had leases. We have professional fees. There's just a whole host of things that literally down to the paper clips. Everybody -- there's a different mindset around here in the way we spend money And when we count everything up at the end of the month, there's just a lot more accountability and appreciation for what the expenses are. It's amazing how all that adds up.
The headcount and all that has pretty much stabilized We've been watching the overtime. Obviously in the case of the sales being off somewhat, commissions are down somewhat. But overall I think it's just really there's no one area you could point to. It's really a concerted effort across the whole spectrum of expenses.
Brian Horey - Analyst
Okay.
Jeff Coats - President and Chief Executive Officer
I will tell you that you will not see any additional large reductions in operating expenses.
Brian Horey - Analyst
That's kind of what you said last quarter and you did better than that, so I'm just wondering if maybe there's some more upside.
Jeff Coats - President and Chief Executive Officer
We're always going to try to do a little bit better than that, but we're also kind of turning the corner and moving into a new year and we're reinvesting in the business a little bit and bringing in a few additional people to drive things forward.
Curt DeWalt - Chief Financial Officer
I'd like to make a distinction between expenses and investments. So while some of those numbers may go back up, they are hopefully also going to be paying for themselves.
Brian Horey - Analyst
Right. I think I heard you mention -- I just wanted to confirm this, did you say since Q1 the number of internally generated leads has increased 9x? Did I hear that right?
Jeff Coats - President and Chief Executive Officer
Yes, you did.
Brian Horey - Analyst
Okay. Which has had obviously a great impact on gross margin. What kind of upside do you think there is from here in gross margin and the ability to drive more organic lead volume?
Jeff Coats - President and Chief Executive Officer
I don't think we'll see an increase of nine times during 2010. We will see additional pickup. Not really sure quite yet where it will settle out. Part of that will be a result of what's going on in the market for new cars. And you know, as I said in the remarks, there's some early signs of improvement, but until unemployment gets straightened out and auto financing is widely available, there's still going to be issues. So I think we'll see an increase, but not that dramatic.
Curt DeWalt - Chief Financial Officer
And in terms of gross margin, we are optimistic about some further material improvement in gross margin.
Brian Horey - Analyst
Okay. And then one last question. In terms of the lead volume and the impact to car sales and all that kind of stuff, we all obviously understand the impact of Cash for Clunkers. But if I look at the SAR data for the last few months, there has been a tick up in that. And even if you kind of look at the last few years, it looks like your kind of Q3 to Q4 new car lead revenue was down a little bit more this year than prior years. Is there anything else going on besides the Cash for Clunkers effect?
Jeff Coats - President and Chief Executive Officer
Not really. I mean there's still a little bit of the malaise in the marketplace this year because of what's happened -- or last year rather, in 2009. But the two big drivers really were a demand fall forward into the third quarter driven by Cash for Clunkers which then resulted in a lack of inventory on dealership lots. Because the 2009s were pretty well sucked out of the system through Cash for Clunkers because dealers had already pretty well managed down their inventories during the course of the year. And then the 2010 models were not delivered in nearly the volumes of past years and were a little bit lighter. Remember, factories for certain manufacturers were closed entirely or production was cut back. So it was really there was a lack of inventory in the system. We heard that over and over again. So dealers are not going to buy leads if they don't have cars to sell.
Brian Horey - Analyst
Yes. Are you getting a sense that kind of things are back to a more stable inventory environment and selling environment as we're in the new year now versus where we were in Q4?
Jeff Coats - President and Chief Executive Officer
I think things are getting back to normal. I was down in Orlando a few days ago for the National Automobile Dealers Association and I can tell you the difference between 2010 NADA and 2009 was pretty dramatic. Last year was like a wake and this year there were a lot of optimistic people. So I think people are -- our push attitudes look good and I think the OEMs are giving off better vibes this year than they were last year.
Brian Horey - Analyst
Okay. Thanks very much for your time and congrats on all the progress in the quarter.
Jeff Coats - President and Chief Executive Officer
Thank you. Thanks for your interest, Brian.
Operator
Richard Mansouri, [Della Cameron] Capital.
Richard Mansouri - Analyst
Thank you. I want to talk about a topic that we've spoken about it seems like many, many times, Jeff. Matter of fact, I'm looking at a transcript from last year's conference call dated March 12th of 2009. And one of the questions comes from me and I focus on the cash and it says here I said, so I guess I'm just trying to understand why the Company, why the board hasn't authorized an open market share repurchase program for at least some portion of the cash that the Company has. Now this was a year ago. And your response, according to this transcript is, Richard, as you know from prior conversations that you and I have had, that the board is in fact considering a lot of different strategic alternatives. We are in fact discussing the possibility of some sort of a stock buyback. There hare been no decisions made at this point in time. Then there's a lot of other text. Then you end that paragraph by saying, that doesn't mean that we are saying we are not going to do a stock, buyback, it just means that we're currently considering that among other options. So I'm hearing some positive progress on the operational front which you guys should be commended for, but this has been one year. So I guess my question is, what is it that you're currently considering that would be better than utilization of cash to buy back stock? Because we're in a close to historically low interest rate environment and we've been hearing the same thing about the board or the Company considering this usage for probably more than a year. Can you just comment on that, please?
Jeff Coats - President and Chief Executive Officer
Richard, as always, it's such a pleasure to talk to you.
Richard Mansouri - Analyst
It's so nice that you can say that with a straight face. But I don't know if you're saying it with a straight face or not, but thank you.
Jeff Coats - President and Chief Executive Officer
I can say it with a straight face. You're right, those were my remarks last year. I think in the context, I can tell you at that point in time the board was considering a lot of different options. If we look back to March of last year, the stock was close to an all time low. We made the decision obviously not to implement an open market stock buyback last year. Candidly, because of current market conditions, the market conditions at that time. Our market conditions, not the stock market, but the automotive market conditions where two of our biggest customers were on the brink of filing bankruptcy. And decided it was better to conserve our cash We currently believe that there are other, better uses for our cash than to implement a stock buyback. There are numerous strategic opportunities in the marketplace. I have repeatedly said that we are in the midst of looking at those opportunities. The best that I can say right now with regards to that is, stay tuned. If you're only in the stock hoping that we're going to do a stock buyback, I'm not going to say anything today that's going to make you happy. And that's about as candid and honest as I can be.
Richard Mansouri - Analyst
And it's appreciated, your candor. I don't know anyone who is in the stock for just the buyback, I'm just trying to understand the Company's thinking. And again, we're not saying that you've done anything imprudent with the cash. It's right to be prudent, it's just a question that has been on our mind for some time because you have to admit, the Company has been sitting on a fair amount of cash in the context of the overall market cap of this Company for some time, would you not agree?
Jeff Coats - President and Chief Executive Officer
Yes, I would, I would agree. Your question is not surprising nor imprudent at all. I completely agree. Again, I would say, given the circumstances and the period of time, there are some incredibly interesting opportunities, so I guess I would say just be patient a little longer.
Richard Mansouri - Analyst
Okay, it's appreciated. Thanks once again.
Operator
William Martin, Ragan Capital
William Martin - Analyst
Good afternoon, gentlemen, how are you? Just curious, without the Cash for Clunkers which pulled ahead a lot of business, do you think you would have been cash flow positive for the full quarter?
Jeff Coats - President and Chief Executive Officer
For the full quarter -- it would be reasonable to assume that. It was a big demand pull forward and it's kind of interesting because a lot of people believed even in the July timeframe that Cash for Clunkers was only going to pull forward demand, it was not going to really increase overall demand. And that is what ended up happening perhaps in large part because there was not enough inventory in the system to support higher sales. It really did suck a lot of the inventory out of the system.
William Martin - Analyst
Right. Looking at the substantial increase in organic leads, first off, congratulations, it's tremendous progress. Just curious, what are you doing there and how sustainable is it?
Jeff Coats - President and Chief Executive Officer
A portion of it is just basic blocking and tackling. Some of it is fixing things with the websites that needed to be fixed, doing some upgrades, and better focus on search marketing. Most of this has been generated thus far with search marketing which of course is paid. We've begun doing some search optimization but haven't been able to do as much of that while we were in the process of basically fixing and upgrading the websites. We've come a pretty long way in terms of fixing the things that needed to be fixed, improving and optimizing the sites, and beginning to integrate the content and technology, and reviews, photos, and everything that we've gotten out of the various transactions that we've done. So we believe that this year we will be able to see a nice improvement in our search optimization activity. We think it's sustainable, yes.
William Martin - Analyst
Great. Are you starting to see the automakers spend money again on advertising?
Jeff Coats - President and Chief Executive Officer
They are starting to spend money on advertising, particularly with new launches that are coming out this year. There's a lot of interesting stuff going on. So we are beginning to see it, yes.
William Martin - Analyst
Got it. And given the consolidation in the dealer space, can you just talk about your initiatives to better target some of the larger auto dealer networks and also some of the auto OEMs?
Jeff Coats - President and Chief Executive Officer
Sure. We already do business with a significant number of the OEMs, probably a significant majority of the OEMs in one form or another. Different OEMs have different types of corporate lead programs, so we participate with each one on their respective basis. We have been increasing our penetration in the OEMs. We've recently been part of some new programs with some new OEMs that we haven't done business with for while. We are working on some additional -- we are in discussions with additional OEMs either directly or indirectly for additional business.
With regards to the dealer groups, we do business with many if not most of the large dealer groups, but they're interesting animals. Just because you do business with a large dealer group does not mean you have all of the dealers in that dealer group signed up on your program. What you kind of get for most of them, not all, there are always exceptions, are a bit of a hunting license. You get a blessing from corporate to then go out and market to the individual dealerships within the dealer group and have them sign up for your program. Some provide you more help in that than others. But it's not dramatically different from just going out and signing up dealers.
We do think that some of the new products that we are working on like iControl that we recently announced, should and preliminary seem to be helping us pretty significantly. Because iControl gives the dealer groups at the corporate office much more control and visibility over what they're doing so they can allocate all the way down to the dealership level, all the way down to the make and model, and turn them up and turn them down from a territory standpoint. So there's a lot of functionality which is very helpful for the large dealer groups. So we do think this will help us from a penetration standpoint within the dealership groups that we're already in and for signing up new ones. It's been very well received thus far.
William Martin - Analyst
Great. And Jeff, I'm just curious, how has your thinking evolved about strategic opportunities in the sector given the pretty dramatic fundamental improvement in the business?
Jeff Coats - President and Chief Executive Officer
The opportunities are seemingly still there.
William Martin - Analyst
You're just in a better position?
Jeff Coats - President and Chief Executive Officer
Yes. Our stock is stronger, our results are obviously doing better, we are gaining credibility in the marketplace. And as you well know, being in a transaction mode, a buyer has to have credibility with a seller regardless of the form of the transaction. So I think I'm cautiously optimistic about what will occur during 2010.
William Martin - Analyst
Should I read that last part of that statement into saying that you're more likely to be a buyer of assets than a seller? Or were you just using an example there?
Jeff Coats - President and Chief Executive Officer
Well my general counsel is sitting here shaking his head. I really would like to answer that so I'm going to answer that. We are more likely to be a buyer.
William Martin - Analyst
Got it. Okay, well Jeff, if I could just weigh in with my two cents on the stock buyback topic real quick, I would just say as a large shareholder, note that perhaps while large as a percentage of the Company's total market cap, your cash that is, in the grand scheme of things it's not a large amount of money. And I really believe the optionality of that cash is extremely valuable. So I like having you guys sitting tight with it right now. But thank you for all your hard work. It is greatly appreciated.
Jeff Coats - President and Chief Executive Officer
Thank you. We appreciate your support and interest.
Operator
(Operator Instructions). Robert Setrakian, Helios
Robert Setrakian - Analyst
Hi, guys. Congratulations really on the great quarter, great year in difficult environment. You made a lot of progress. I am going to ask a question -- I think for the first time in ten quarters, I'm going to break my record and not make any comments or ask any questions about the stock buyback or insider buying, but I'll focus on something else this time. In the press release it says we generated positive cash flow for the months of November and December. Is this a trend that you expect to continue going forward?
Jeff Coats - President and Chief Executive Officer
Since -- let me equivocate as much as possible on my answer. We are not planning to give guidance, so I think what you can look at are the other comments that I made in my remarks related to returning to top line growth and profitability in 2010. We do reasonably expect the belief to be that we will be profitable in 2010.
Robert Setrakian - Analyst
Yes, if you do the math and if you extrapolate the months of November and December and you do the math on the comments that you made, one should reasonably expect the trend to continue which is excellent. And this is all based obviously on a certain SAR level in the industry. If we have a little bit of an improvement there, then we could really do well. That's the way I read it and hopefully I'm reading it correctly.
Jeff Coats - President and Chief Executive Officer
It's probably a reasonable assessment. Obviously a big part of the improvement has been related, a big improvement in cost of revenue.
Robert Setrakian - Analyst
Yes.
Jeff Coats - President and Chief Executive Officer
And we continue to believe that we have ways to continue to improve our cost of revenue. And that will obviously have a big impact. And if our sales recover during the course of the year, things should naturally flow from there.
Robert Setrakian - Analyst
Great. Congratulations. Thank you again.
Operator
There are no further questions in queue. I would now like to turn the call over to Jeff Coats for closing remarks.
Jeff Coats - President and Chief Executive Officer
Well I guess I'm pretty well burned out on additional remarks. We appreciate everybody's support. As I said to Richard, please stay tuned. We do believe 2010 is going to be a very dynamic year for us this year. It certainly looks like the general economy is beginning to recover, the automotive economy seems to be showing signs of growth, and we do believe we will benefit from that in a myriad of ways. So thank you again and we look forward to speaking to you all soon. Thank you, Operator.
Operator
You're welcome, sir. This concludes today's conference call. Thank you for participating. You may now disconnect.