Autoweb Inc (AUTO) 2012 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Autobytel announces the 2012 second quarter financial results call. (Operator Instructions) As a reminder, today's conference is being recorded.

I would now like to turn the conference over to your host for today, Mr. Roger Pondel, Investor Relations for Autobytel. Sir, you may begin.

Thank you, Mary, and good afternoon, everyone. Welcome to Autobytel's 2012 second quarter conference call. Today I am joined today by Jeffrey Coats, President and Chief Executive Officer, and Curt DeWalt, Senior Vice President and Chief Financial Officer.

Before we begin, I need to remind you that during today's call, including the question and answer session, any projections and forward-looking statements made regarding future events or Autobytel's future financial performance are covered by the Safe Harbor statements contained in today's press release, and the slides accompanying this presentation, and the Company's public filings with the SEC. Actual events and results may differ materially from those forward-looking statements.

Specifically, please refer to the Company's Form 10-K for the year ended December 31, 2011, and Form 10-Q for the quarter ended June 30, 2012, which was filed prior to this call, as well as other filings made by Autobytel with the SEC. These filings identify factors 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 the slides by clicking on the link in today's press release or by visiting Autobytel's website at www.Autobytel.com. When there, go to Investor Relations and click on events and presentations.

Also, please note that during this call we will be discussing EBITDA and cash flow, which are non-GAAP financial measures as defined by SEC Reg G. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in the slides being used on this call and that are posted on Autobytel's website. Now I will turn the call over to Jeff.

Thank you, Roger. Good afternoon, everyone. Today I'm pleased to report our fifth consecutive quarter of profitability and our sixth consecutive quarter of positive cash flow. We also increased our cash balance to $12.4 million at the end of Q2, despite spending $1.2 million during the quarter to repurchase shares.

While we remained profitable and cash flow positive during Q2, softness in our internal and external consumer purchase request supply volume, which we alluded to on last quarter's call, combined with the usual Q2 seasonality did impact our results. This supply softness, which predominantly affected our wholesale automotive revenue, as you can see on slide four, began in late March and extended into early June.

Choppy second quarter retail sales and declining consumer confidence impacted not only Autobytel but many other consumer facing businesses. In the automotive sector, specifically, both General Motors and Ford, experienced moderate Q2 growth in the 4% to 6% range for vehicle sales, although General Motors posted an 8% decline in vehicle sales for April.

The majority of the growth in Q2 vehicle sales is attributable to Honda and Toyota, both experienced inventory shortages for much of 2011, bolstering vehicle sales comparison figures in 2012.

In addition, as you can see on slides five and six, retail SAR trends for March through May 2012 reflect the softness that affected our new car purchase request volumes and revenues. As many of you know, retail SAR, the measure most representative of our business, is the seasonally adjusted annual rate of sales for the retail segment, which excludes fleet sales from which we do not benefit.

Retail SAR began 2012 quite strongly with a 14% increase from January to February, although you can see the softening beginning in March with a 6% decrease. In line with our own experience during these months, the decrease in the retail SAR accelerated for April, but then began strengthening somewhat for May due, in part, to Memorial Day holiday sales. Retail SAR increased again for June, reflecting a buildup to the more extensive fourth of July holiday sales and incentive events. In addition, the July consumer confidence index, an important indicator of the economy, improved for the first time since February.

The good news for Autobytel is that the softness in our Q2 purchase request supply volume appears to have abated, and we are now experiencing strong increases in our purchase request generation activities. At the same time, we continued to experience strong demand from both our wholesale and retail automotive customers. These improvements have largely paced the movements in retail SAR, as you can see on slides five and six, and have continued since mid-June, which at this time is indicative of a stronger third quarter.

Preliminary total SAR for July seems to be coming in at a strong $14.1 million, similar to June, which should mean another good month for retail SAR, as well, although that figure will not be available until later in August.

I would note that J.D. Powers' July retail SAR projection of a 5.7% decline from June, on slide five, does not mirror our experience during July. In addition, J.D. Powers' projection assumes a 37% increase in fleet, which does not seem to be supported by General Motors and Ford's actual results as they both yesterday announced significantly lower fleet sales in July than had been expected.

I would also point out that our Q2 retail automotive revenue of $6.2 million is at its highest level over the past 10 quarters, up 10% year-over-year and 5% sequentially, somewhat reflecting the retail SAR trends. In addition, the number of dealers participating in our new and used retail automotive purchase request programs is at its highest level in the last 14 quarters. These improvements are occurring despite our having largely eliminated the dealer signup incentives that have dominated our industry for years. We believe this is due to our focus on improving the conversion or close rates of our purchase requests, as well as our work to ensure we have appropriate geographic dealer distributions for the key national and regional markets.

And, finally, as I'm sure you are aware, two of our Executive Vice Presidents recently resigned to pursue other employment opportunities. We have taken this opportunity to reevaluate our needs and internal resources in the areas previously overseen by these two Executives and, as such, we do not currently plan to refill these positions. Their duties and responsibilities are being handled by existing experienced Executives who are now for the most part reporting directly to me and who already manage the operations previously overseen by the former Executives. We have a solid Management Team and dedicated, experienced employees who are focused and excited to pursue the opportunities ahead for Autobytel.

I will come back to update you on some of our key initiatives after Curt provides the financial review. Curt?

Thank you, Jeff.

As shown on slide four, on a year-over-year basis total revenues for 2012 second quarter increased 3.2% to $15.7 million, up from $15.2 million for the prior year quarter, primarily reflecting increases in both wholesale and retail automotive purchase requests. On a sequential basis, as Jeff noted, despite an increase in retail automotive revenue we also experienced a 5.8% decline in total revenue, primarily due to a 14.3% decline in wholesale automotive purchase requests related to seasonality and softness previously noted.

On slide four you can see our quarterly revenues by source for the 2012 second quarter. Total automotive purchase request revenue grew to $13.2 million from $12.3 million for the second quarter of 2011, reflecting a 5.1% year-over-year growth in revenue from wholesale channels and a 9.7% year-over-year increase in retail.

Finance request revenue declined 8.7% sequentially and 17.9% compared with the prior year, as a result of increased competition, continuing softness in our finance related customer purchase request acquisition activities.

Advertising revenue was up 7.9% sequentially, but declined approximately 6% year-over-year due primarily to the timing of direct marketing revenue as new model launches this year are [skewing] heavier toward the second half of the year.

We delivered approximately 958,000 automotive purchase requests in 2012 second quarter, up from approximately 908,000 for the prior year period. Sixty-nine percent of those were in the wholesale channel, with 31% in the retail channel. We also delivered approximately 87,000 finance requests for the second quarter of 2012 versus 111,000 a year ago.

On slide eight, you can see the gross profit was $6.3 million for the 2012 second quarter, down slightly from $6.4 million for the second quarter of 2011. Gross margin totaled 40.3% versus 40.9% sequentially and 41.7% for last year's second quarter. The reduction in both gross profit and gross margin primarily reflected cost increases during the quarter related to consumer purchase request generation activities, as we increased our expenditures to offset purchase request volume declines.

On a year-to-date basis gross margin was 40.6%, up 60 basis points from the first six months of 2011.

Total operating expenses declined slightly for the 2012 second quarter to $6 million, from $6.1 million for last year's second quarter.

You'll also see on slide nine noncash stock based compensation for the 2012 second quarter was $218,000 versus $273,000 for the 2011 second quarter.

Amortization and depreciation totaled $511,000 for the most recent second quarter compared with $566,000 for the prior year second quarter.

This brings EBITDA to $922,000 for the second quarter of 2012 versus $1 million for last year's second quarter.

We generated net income of $231,000 or $0.02 per diluted share for the second quarter of 2012 based on 9.3 million average weighted shares outstanding. Net income for the second quarter of 2011 was $199,000 or $0.02 per diluted share based on 9.7 million average weighted shares outstanding. EPS and share counts now reflect a one-for-five reverse split, which became effective on July 11.

Cash provided by operations grew substantially to $2 million for the most recent second quarter compared with $1.4 million for the second quarter of 2011. At the end of June our cash and cash equivalents balance had grown to $12.4 million, up from $11.2 million at the end of 2011 and $8.6 million a year ago. As Jeff mentioned, this growth occurred even as we invested $1.2 million during the quarter to repurchase our stock, completing our original 1.5 million stock purchase program.

On June 7th the Board authorized a new $2 million repurchase program under which we have yet to repurchase any shares.

And, finally, as many of you know, we received confirmation from NASDAQ last week that Autobytel has regained compliance with NASDAQ's $1 minimum closing bid price requirement, and the matter is now closed.

With that, I'll turn the call back to Jeff. Jeff?

Thanks, Curt.

As you can see on slides five and seven, the automotive recovery is continuing and ongoing growth forecasted to continue over the next several years. To better align our business with the improving industry outlook and given the increasing importance of online automotive marketing and ad spend we have started to devote more resources to further strengthening Autobytel.

Our investments will be focused on several key areas that we believe will provide the best opportunities for revenue growth. Among them is continuing to enhance purchase request quality and volume. For those who have been following our story for awhile, you know that this initiative has been a key mantra for the Company. We'll also be further developing our flagship website, Autobytel.com, to deliver superior experience for consumers and to increase traffic and the volume of high close rate purchase requests for our customers.

As you know, we've been working with R.L. Polk to provide transparency in purchase request quality. This data has confirmed that our purchase requests convert into sales at a significantly higher rate than what we believe to be the industry average of 6% to 8%. The collaboration has also provided valuable data on affiliate quality, consumer crossover between makes, and purchase request conversion at the dealer level.

Our investment in ongoing quality improvements, coupled with what we believe to be the industry's largest combined wholesale and retail automotive purchase request distribution network should allow us to continue to deliver high converting purchase requests to a growing number of dealer and manufacturer and customers. We are also developing new content and tools for the financing section of Autobytel.com and investing in new lead generation activities to support our specialty finance business.

Historically, we've aggregated much of the lead volume for this business, but given the volume and quality concerns in this market that have increased over the past several quarters we are now placing more focus on generating these finance customers ourselves. Similar to our experience with our successful focus on increasing our internally generated automotive purchase requests, we believe this will have similar impacts on finance lead quality and volume improvements, as well as margin expansion.

We are excited to announce that we launched the first phase of the mobile version of Autobytel.com in June and have since seen increasing consumer activity on the site. You can see screen shots of Autobytel.com served to both mobile and PC devices on slide 10. We launched this phase of the mobile experience with an exclusive advertising sponsor through September, and have already begun to market the mobile site to other OEM customers.

Mobile traffic has more than doubled from the months preceding the mobile launch through July. Engagement is up 40% and mobile page views have nearly tripled. We expect visits to continue growing as we optimize the mobile experience and further invest in marketing the site.

Future phases of the mobile site will focus on bringing consumers and dealers closer together and will offer location specific services and content, as well as a suite of financing tools, that will allow consumers to arrange financing directly from their mobile device.

In the second quarter we launched our expanded dealer director on Autobytel.com, a quarter earlier than expected and in conjunction with the launch of the mobile version of the site. The new dealer directory is available on our mobile site and offers a comprehensive listing of all franchised dealers in the United States, as well as maps, dealer ratings, and shopping tools. By connecting consumers with dealers in their areas we are giving consumers even more reason to make Autobytel.com their preferred automotive website.

Over the last year as a result of several enhancements we've doubled consumer traffic to Autobytel.com, as you can see on slide 11, and page views have tripled. With the expansion of our unique editorial content and reviews, the addition of our own car TV video section, and the relaunch of our popular Car of the Year Awards consumers are increasingly using Autobytel.com for their car research, shopping, and auto maintenance needs.

Our My Garage Ownership section is still in its infancy, and we are continuing to develop tools for this section, while evaluating alternatives to further speed its growth. Along these lines, we are working to incorporate a personalized My Garage account for consumers as part of the purchase request process. We think this feature will provide benefit to our consumers and increase their adoption of this valuable consumer ownership tool.

As you can see on slide 12, our YouTube video channel, which we first launched in December 2011, also is helping drive recognition for Autobytel.com. Now with over 4.5 million video views, up from 2.5 million in May, we are reaching a steadily growing number of consumers. From new car reviews to auto show coverage, to interviews with popular race car drivers, we are providing automotive consumers with entertaining and valuable content.

In order to expose more consumers to Autobytel.com content we also recently partnered with the E.W. Scripps Company to provide automotive content for Scripps' television station websites in 13 major TV markets. In addition to providing general automotive industry news, we will also provide car reviews and we'll work closely with Scripps to develop content reflecting the local markets each site serves. This agreement is important for us as it expands our content distribution platform and increases the number of consumers interacting with proprietary Autobytel automotive content. We are also pursuing additional similar high quality traffic opportunities.

The last initiative I'll discuss today is improving ad revenue. For the last several years we've been primarily focused on improving our core purchase request business. It's only been the last 18 months that we have shifted more focus to our advertising business in conjunction with the relaunch of Autobytel.com. The advertising business typically runs on an annual cycle in which agencies for the OEMs purchase most of the advertising inventory in the third and fourth quarters for the subsequent calendar or fiscal year.

During the previous upfront cycle, we were focused on meeting customer delivery expectations within our existing share of individual OEM budgets. In Q4 2011 we began systematically sun setting and successfully redirecting the traffic from five of our six branded legacy websites to Autobytel.com, as you can see on slide 13. This allows us to focus more of our resources on the relaunched Autobytel.com.

With a combination of pure organic traffic growth on Autobytel.com, traffic redirected from the legacy sites and new traffic investments we are starting to see real traffic gains, as well as increases in page views per visits, such that we are now over delivering against our 2012 advertising commitments. This over delivery positions us nicely for 2013 and we are confident that we will be able to increase the volume and consequently the revenue in the upfront for 2013 as we expect to see larger shares of OEM online advertising dollars.

As summarized on slide 14, we have successfully repositioned Autobytel to once again be a leader in our core markets through a combination of strategic changes and operational excellence. With overall favorable automotive market trends and a continued shift towards digital activities that support these improving automotive markets, we are well positioned for sustained growth and profitability as we capture market share. We remain optimistic about the opportunities ahead, and are becoming more aggressive with respect to capturing those opportunities.

We anticipate single-digit revenue growth for 2012, as well as more than doubling net income year-over-year, even with the increased investments in the business to support our efforts to drive stronger growth in 2013.

With that, Mary, we'll now take questions.

(Operator Instructions)

Our first question comes Jared Schramm from Roth Capital Partners. Your line is open.

Good afternoon.

Hi, Jared.

You mentioned last quarter you hired a consultancy group to provide better color on -- for dealer education in regards to your close rates being higher than your competitors, can you just provide some background on how this is trending in the quarter on an overall initiative basis?

Well, it's not really a consultant, it's a data firm known as R.L. Polk. They're a pretty well-known firm in the automotive industry, and what they do is capture, analyze, and provide data to players in the automotive industry.

So what we've actually been doing is working with them for probably almost a year now to design and implement a program through which we feed all of our lead information into databases, cross-reference with databases that they aggregate from all 50 DMVs in order to determine how many of the leads we've sold have turned into actual car purchases, and then they report that back to us on a regular basis, on a 30, 60, 90-day kind of window.

It's actually providing a huge amount of insight for us. It has demonstrated to us that the leads we're generating and selling to our manufacturer and dealer customers are closing at 100% to 200% above the industry averages of 6% to 8%. It also provides us a lot of other good insight into if the consumer bought from the dealer that we sold the lead to, if not, which dealer did they buy from? It's on a privacy protected basis, so we don't necessarily know exactly which consumer it is, we just know that the consumer leads that we've sold into our retail and wholesale channels as to how many of them and over what period of time have turned into actual vehicle sales.

Okay.

So it's very helpful. We're beginning to use it in conversations or we've begun to use it in conversations with our manufacturer customers, when we're talking about lead quality, and we've begun to use it in conversations with our dealer customers with regards to the same thing. And, candidly, it's also helped us focus on opportunities to approach dealers for new customer relationships as a result of seeing some of the results of this data.

Okay, I was looking recently, GM said that they're going to start offering more subprime financing to stimulate some sales growth here. Have you seen the positive impact from this yet? And tailing off on that question, just kind of an overall high level thoughts on finance leads right now?

The finance leads business has been impacted over the last three or four quarters by a significant increase in competition in those markets for the consumers that need the financing. As you probably know, financing has come back very strongly in the automotive markets. Subprime financing is also coming back very strongly. And so what that's done is brought either existing players to higher levels, brought some new players into the market, all of whom have been competing for the same pool of consumers who need to have that subprime financing arranged for them.

Unlike our core automotive leads business, where we generate approximately 70% of the leads we sell internally, in the finance leads business we essentially determine the businesses aggregate. We buy those leads from outside suppliers and then sell them to the dealers or financial institutions with whom we have relationships.

The supply side of our equation has been impacted, that's what's been affecting our specialty finance revenue over the last few quarters. The demand from dealers and lenders has remained very strong. So one of the things that I noted in remarks on the script is we're now beginning to focus on internal lead generation activities in part in consultation with some -- an outside consultant to generate more of those leads ourselves so we can take control of our destiny back into our own hands, much like we've done on the automotive lead side.

Okay.

We would expect to see some of the same benefits, improvements in quality, improvements in volume, and at the end of the day we would expect to be able to expand our margin in that business, as well, as a result of beginning to capture those customers ourselves online.

And on a high level basis how does an OEMs offering up greater subprime financing across the board really potentially benefit you looking into 2013?

I didn't answer that, I'm sorry. It does help us overall because the more traffic online, the more consumers that are looking for opportunities overall, it does generally help us. So, you know, I think as that's -- what's the saying, rising tide lifts all boats, I think that generally would be the case.

We are working hard to turnaround our revenue in the specialty finance side, which candidly it's been a good business historically, it's been a nice margin business historically. We have a good team of people in Detroit focused on that, and that's why we've decided it's appropriate for us to invest in that business now to take more control over our lead supply. That really has been the only area that's been an issue for us, has been on the lead supply side.

Okay. Thank you very much. That's it for now.

Thanks, Jared.

Thank you. Our next question comes from George Santana from Ascendiant. Your line is open.

Hi. Thanks for taking my question. Can you provide just a little bit more color on how you see the outlook in Q3, and also we'd like to see the stock repurchased but whether there's any appetite for establishing a quarterly dividend? Thank you.

We currently are very positively focused on Q3. The softness that we saw earlier in Q2 that did create some issues in Q2, as I mentioned, does seem to have abated. Our internal lead acquisition activities are pretty much back on track. We feel good about where we are. And even our acquisition of leads from outside partners has also picked up as they have also seen opportunities to increase the volumes themselves.

So we feel pretty good about where we will be in the third quarter. Historically the third quarter is the strongest quarter in the automotive business. It's generally been our strongest quarter, as well. I would expect it to be quite a strong quarter for us this year.

This year, you know, the first quarter started off unusually strong. I think that with some -- I think many people in the automotive industry think because of the mild weather in much of the Eastern and Midwestern part of the country there were some sales pulled forward from the second quarter into the first quarter, which is one of the reasons why that quarter was so strong. But the outlook for us right now is to continue to see a strong third quarter.

Your question about have we considered a dividend? We, the Board constantly reviews a lot of different things. It has been discussed. There has been no decision about doing something like a dividend at this time.

Okay. Thank you.

Thank you. (Operator Instructions)

Our next question comes from Sameet Sinha from B. Riley. Your line is open.

Yes. Thank you. My first question is obviously there have been some changes in Yahoo! Autos with TrueCar moving away. Can you talk about your relationship with the new company which will be taking on the lead generation responsibilities there? Are there any opportunities for you to work with this company? And, secondly, can you talk about the advertising business? I mean how should we think about it in the second half of the year and especially in 2013 where I guess some of the CPM caps go away? Thank you.

The -- Yahoo has made a deal with a company by the name of Detroit Trading to do the transport of Yahoo! Auto leads to various players in the market, like ourselves. We have a very good relationship with Detroit Trading. We think very highly of them. We actually had a contract negotiated with them before it was even public that the change was being made, and we are currently receiving Yahoo leads from them. So we are benefitting from that.

We do expect to benefit from that as we move forward. It's unclear at this time what the overall volume opportunity is as Yahoo reconfigures its auto site after the last few months, but we're -- it's a positive development for us and I think it'll have a meaningful impact for us on revenue.

Can you talk about how that works? Would you say Detroit Trading is responsible for transporting the lead to players like you, how does that flow work?

They basically have a technology deal with Yahoo where as people submit leads from the Yahoo websites, those lead forms, it's a dealer select kind of basis. They'll pop-up dealers on those lead forms. Many times the dealers that will come up may only be Autobytel dealers. It really depends upon the make and model and the geography based upon the coverage.

They are selling some of their leads to other players in the market. I think we've negotiated an attractive financial deal with them, which positions us quite nicely to benefit strongly from the lead flow coming from Yahoo. So Detroit Trading takes them and then passes them through us through our lead engine for delivery to our customers through our own lead engine technology.

Okay, great. And then the question about the CPMs?

From an advertising standpoint as I was trying to explain a little bit in the remarks earlier, advertising in the automotive space is similar to other industries. It's done through an upfront system where commitments are made for the subsequent calendar or fiscal year depending upon the manufacturer. So our advertising revenue this year is basically locked in based upon commitments that were made by the manufacturers to us in the upfronts last year, based upon estimates for growth in our page views and CPMs that were negotiated at that point in time.

But when I mentioned earlier that we are over delivering to basically all of our advertising customers right now, what that really means is that we have been able to successfully accelerate the growth in traffic and page views and consumers coming to Autobytel.com ahead of schedule, which means we are over delivering to those customers. There is no economic benefit to us in this calendar year of over delivery.

The advertisers get the benefit of that, but what it does is it positions us very nicely for our upfront conversations which are beginning now in the third quarter, will extend into the fourth quarter, so the fact that we've now over delivered will -- and we've meaningfully grown the traffic to the site, positions us well to have the upfront conversations at a higher level of page views with a higher growth rate built into increases in page views for 2013. We do expect to see some CPM increases in addition to those traffic increases, which will positively impact our overall advertising revenue for 2013.

Can you venture a guess as to what sort of a CPM lift could you expect to see the next upfront? I know it's a negotiated process, but just from a CPM opportunity cost that you have right now what could it be?

I really can't even hazard a guess, Sameet. Each negotiation is unique based upon how we've delivered against our commitments to them this year or in the case of new advertisers we're kind of starting from scratch.

But we do know, we've gotten very positive feedback from existing advertisers and potential new advertisers based upon the quality of the new site, the design, consumer satisfaction with that, and our click through rates which is the quality metric for online advertisers has been very high, they've been at the high end of the range that these -- that the advertisers look for, so that positions us very well. We expect to try to maintain those high quality metrics, which is always a balance as you increase your traffic to continue to maintain the high click through rates, but I think we're off to a good start.

So really I wouldn't even know how to hazard a guess on what the CPMs will look like across the board, but we do expect to see some improvement because the quality and the volume of our advertising impressions have increased meaningfully over the last year.

Okay. Thank you.

Thank you. Our next question is a follow-up from George Santana of Ascendiant. Your line is open.

Yes, thank you. You continue to do a fine job on managing your operating expenses. I'm noticing its tracking last year where it went from $6.6 million down to $6.06 million in the second quarter. Is this $6 million a new level that we should expect going forward or do you expect it to kind of track that seasonality of last year?

There will be some increases in the OpEx numbers related to the investments that we're making. Some of those investments will be related to cost of revenue, some will be related to operating expense, but they're all designed to drive stronger growth for 2013. Generally, we will track the seasonality, but you will see some increases. We do expect to see good leverage in our operating expenses as we move forward and spur further growth in revenues, and I think you can look at the slides in the deck related to the growth in traffic on Autobytel.com and see why we're bullish about investing further behind that to really accelerate that growth.

Okay, I guess there's really no fault to be found with you guys in terms of really turning around this Company, at delivering on your profits, delivering cash flow. If there's any negative feedback that I hear from investors it's that, well, it's a fairly slow growth Company right now, couching the question of dividends. But it seems like you're doing a lot of things, and you even alluded to refocusing that, now that you've got the Company stable and performing on accelerating that growth. So as we look towards 2013 will we be hearing a story of greater than single-digit growth, at least on the top line?

We do expect to accelerate our growth for 2013. We are making investments now. I think we'll see some natural lift as a result of the ongoing recovery in the automotive industry. You can look at the projections for both SAR and retail SAR for 2013. Several of the forecasters, including both General Motors and Ford, have in the last few days reaffirmed expectations of something between 14 and 14.5 for 2012. So I think that will position the whole market for some pretty strong growth going into 2013. We are investing behind our success in order to grow our revenue on a faster basis.

Okay, and barring some type of European meltdown and sever cutback in lending globally if things continue to muddle through economically do the auto manufacturers then increase incentives? And then do you -- does that actually help your business, even if it's a slow growth environment?

Actually, incentives do help our business. They're -- I mean if you look at where some of the manufacturers are for their July results just announced, to some extent you can see who is providing incentives and who is not. General Motors' incentives were down for the month of July, as were their vehicle sales. Toyota, Nissan, Honda were up pretty dramatically. Chrysler was up pretty dramatically.

We do tend to benefit from the manufacturers' advertising incentives because that spurs consumers to come online and do research and do comparisons, which basically put them into our funnels for both page view advertising revenues and, even more importantly, to go through our lead forms so that we can provide those customers to our manufacturer and dealer customers. So it does generally benefit us nicely when there are reasonable incentives in the marketplace.

Okay. Thank you very much.

Thank you, George.

Thank you. (Operator Instructions)

I show no further questions at this time. I would like to turn the conference back to Mr. Jeffrey Coats for closing remarks.

I'd like to thank you guys for joining us today. As we said earlier, we feel good about where we are this year. We expect a good third quarter. It's nice to get the reverse behind us so that we can focus more on growth opportunities in the business and less on NASDAQ. We look forward to talking to you in the future. Thank you.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, and you may all disconnect at this time.