Autoweb Inc (AUTO) 2022 Q1 法說會逐字稿

Good afternoon, everyone, and thank you for participating in today's conference call to discuss AutoWeb's financial results for the first quarter ended March 31, 2022. Joining us today are AutoWeb's President and CEO, Jared Rowe; the company's CFO, Carlton Hamer; and the company's outside Investor Relations adviser, Cody Cree, with Gateway Group. (Operator Instructions)

大家下午好，感謝大家參加今天的電話會議，討論 AutoWeb 截至 2022 年 3 月 31 日的第一季財務業績。今天加入我們的是 AutoWeb 總裁兼執行長 Jared Rowe；該公司財務長 Carlton Hamer；以及該公司在 Gateway Group 的外部投資者關係顧問 Cody Cree。 （操作員說明）

I'd now like to turn the call over to Mr. Cree for some introductory comments.

我現在想將電話轉給克里先生，請其發表一些介紹意見。

Thank you, Sabby. Before I introduce Jared, I remind you that during today's call, including the question-and-answer session, statements that are not historical facts, including any projections, statements regarding future events or future financial performance or statements of intent or belief, are forward-looking statements and are covered by the safe harbor disclaimers contained in today's press release and the company's public filings with the SEC.

謝謝你，薩比。在介紹賈里德之前，我提醒大家，在今天的電話會議中，包括問答環節，所有非歷史事實的陳述，包括任何預測、有關未來事件或未來財務業績的陳述或意向或信念的陳述，均會被轉發。- 看似聲明，並包含在今天的新聞稿和該公司向美國證券交易委員會提交的公開文件中包含的安全港免責聲明中。

Actual outcomes and results may differ materially from what is expressed in or implied by these forward-looking statements. Specifically please refer to the company's Form 10-Q for the period ended March 31, 2022, as well as other filings made by AutoWeb with the SEC from time to time. These filings identify factors that could cause results to differ materially from those forward-looking statements.

實際結果和結果可能與這些前瞻性陳述中所表達或暗示的內容有重大差異。詳情請參閱該公司截至 2022 年 3 月 31 日期間的 10-Q 表格，以及 AutoWeb 不時向 SEC 提交的其他文件。這些文件確定了可能導致結果與前瞻性陳述有重大差異的因素。

Please also note that during this call, management will be disclosing adjusted EBITDA. This is a non-GAAP financial measure as defined by SEC Regulation G. A reconciliation of this non-GAAP financial measure to the most directly comparable GAAP measure, a statement disclosing the reasons why company management believes that adjusted EBITDA provides useful information to investors regarding the company's financial condition and results of operations are included in today's press release that is posted on the company's website.

另請注意，在本次電話會議期間，管理層將披露調整後的 EBITDA。這是根據SEC 法規G 定義的非GAAP 財務指標。該非GAAP 財務指標與最直接可比較的GAAP 指標的調節表，一份聲明，披露了公司管理層認為調整後EBITDA 為投資者提供以下有用信息的原因：該公司的財務狀況和經營業績包含在今天發佈在該公司網站上的新聞稿中。

And with that, I will now turn the call over to Jared. Jared, floor is yours.

現在，我將把電話轉給賈里德。賈里德，地板是你的。

Thank you, Cody, and good afternoon, everyone. Before addressing the going concern and review of strategic alternatives that was announced today, I want to provide context to the overall macro environment and a high-level overview of the quarter.

謝謝你，科迪，大家下午好。在討論今天宣布的持續經營和戰略替代方案審查之前，我想先介紹一下整體宏觀環境的背景以及本季度的高層概述。

The automotive market has continued to face severe headwinds. We're seeing industry-wide low consumer sentiment, rising interest rates, high inflation and overall just an uncertain economy that saw U.S. GDP contract by 1.4% in the first quarter.

汽車市場持續面臨嚴峻的阻力。我們看到全產業消費者信心低迷、利率上升、通膨高企，整體經濟情勢不明朗，導緻美國第一季 GDP 萎縮 1.4%。

In past calls, I've mentioned several key metrics that gauge the automotive industry's performance. One of them being the seasonally adjusted annualized rate of new car, new vehicle sales or SAAR as it's called in the industry. These numbers are tracked by several sources. We tend to focus on the one that's tracked by the Federal Reserve.

在過去的電話會議中，我提到了衡量汽車產業績效的幾個關鍵指標。其中之一是季節性調整後的新車年化率、新車銷售或業界所說的 SAAR。這些數字由多個來源追蹤。我們傾向於關注聯準會追蹤的情況。

While we saw a slight recovery in January SAAR, it quickly retracted back to the low levels that we've seen, we had seen since Q3 of last year, during February and March. So again, while we got a little bit of a bump in January SAAR, February SAAR and March SAAR returned to what were fairly low levels for an industry.

雖然我們看到 1 月 SAAR 略有復甦，但它很快就回落到我們自去年第三季 2 月和 3 月以來所看到的低水平。再說一遍，雖然 1 月的 SAAR 略有上升，但 2 月的 SAAR 和 3 月的 SAAR 又回到了行業相當低的水平。

While consumers are still in the market searching for vehicles, it is taking them twice as long to make a purchase decision compared to pre-pandemic conditions as a result of low available inventory for new vehicles, higher used vehicle prices and an increase in interest rates.

儘管消費者仍在市場上尋找車輛，但由於新車可用庫存不足、二手車價格上漲以及利率上升，他們做出購買決定的時間是疫情前的兩倍。

With prices continuing to rise, as we all know, inflation hit a 40-year high in January according to data gathered by the Bureau of Labor Statistics and looking at -- and then looking at data tracked by the University of Michigan, we've seen overall buying conditions for vehicles having reached a 50-year low. Simply put, the automotive market has continued to face significant challenges.

眾所周知，隨著物價持續上漲，根據美國勞工統計局收集的數據，以及密西根大學追蹤的數據，一月份通膨率達到了 40 年來的最高水平。車輛的整體購買狀況已降至 50 年來的最低點。簡而言之，汽車市場持續面臨重大挑戰。

Reviewing what we were able to accomplish this quarter within the core business, we did see some minor improvement in market conditions in January, like I stated earlier. However, with macroeconomic events unfolding in February and March, we landed softer at the end of the quarter compared to how we started. By capitalizing on some of that favorable early quarter momentum, we saw sequential growth in retail dealer count as well as our lead traffic, while maintaining reduced media spends that we've really focused on to operate in line with the overall macro environment.

回顧本季我們在核心業務中完成的工作，我們確實看到 1 月市場狀況出現了一些小幅改善，正如我之前所說。然而，隨著二月和三月宏觀經濟事件的展開，我們在季度末的表現比開始時更加疲軟。透過利用季度初的一些有利勢頭，我們看到零售經銷商數量以及我們的領先流量連續增長，同時保持媒體支出的減少，我們真正關注的是與整體宏觀環境保持一致的運營。

There are several bright spots within our Digital Media segment, including year-over-year increases in digital ads revenue, click traffic and click volume. Now in terms of the used vehicle acquisition side of the business, we continue to make good progress, refining our funnel conversion rates and optimizing our marketing efficiency, which led to a significant decrease in our overall cost per lead.

我們的數位媒體部門有幾個亮點，包括數位廣告收入、點擊流量和點擊量的同比增長。現在，在二手車收購業務方面，我們繼續取得良好進展，提高了漏斗轉換率並優化了行銷效率，從而使我們的每個銷售線索的總體成本顯著下降。

That momentum carried into this quarter with us purchasing more vehicles in April than we had in any prior months since owning this asset. Despite the progress we've made with expansion and optimization within used vehicle acquisition as well as the long-term potential we still see in this segment, I think that's really important. We see a tremendous amount of long-term potential in this segment. We have made the very difficult decision to suspend our CarZeus operations.

這一勢頭延續到了本季度，我們在 4 月份購買的車輛數量比擁有該資產以來的任何前幾個月都多。儘管我們在二手車收購方面的擴展和優化方面取得了進展，並且我們仍然看到該領域的長期潛力，但我認為這非常重要。我們看到了這一領域巨大的長期潛力。我們做出了暫停 CarZeus 營運的非常艱難的決定。

So now let's address the going concern and the review of the strategic alternatives that we've disclosed in our Form 10-Q, which was filed with the SEC earlier today. We've been talking for a while now on these calls about the economic headwinds we've been facing over the last couple of years. And unfortunately there are no current indicators signaling a recovery in automotive market conditions anytime soon. We've experienced continued losses and worked through our cash supply at a faster rate than quite frankly we anticipated.

現在，讓我們討論一下我們在今天早些時候向 SEC 提交的 10-Q 表格中披露的持續經營和戰略替代方案的審查。我們已經在這些電話會議上討論了過去幾年我們所面臨的經濟逆風有一段時間了。不幸的是，目前沒有任何指標顯示汽車市場狀況很快就會復甦。我們經歷了持續的損失，並以比我們預期更快的速度消耗現金供應。

These factors resulted in the disclosure found in today's press release and Form 10-Q that our management team has substantial doubt about the company's ability to continue as a going concern. In addition to the going concern, our Board has established a special committee that has been tasked with evaluating strategic alternatives. As I just mentioned, these factors resulted in our decision to suspend CarZeus operations and furlough our employees within this segment. This was not a decision we made lightly.

這些因素導致今天的新聞稿和 10-Q 表格中披露，我們的管理團隊對公司持續經營的能力有重大懷疑。除了持續經營之外，我們的董事會還成立了一個特別委員會，負責評估策略替代方案。正如我剛才提到的，這些因素導致我們決定暫停 CarZeus 運營，並讓該部門的員工休假。這不是我們輕易做出的決定。

I remain steadfast in my belief that AutoWeb has the potential to drive long-term value as an automotive matchmaking platform. But suspending CarZeus operations was necessary to support the viability of our core lead and click operations. As we move forward with this process, we will work tirelessly to guide AutoWeb through these difficult times while being incredibly mindful of our cost structure to conserve cash.

我仍然堅信 AutoWeb 作為汽車配對平台有潛力推動長期價值。但暫停 CarZeus 營運對於支持我們核心線索和點擊業務的生存是必要的。隨著這一進程的推進，我們將不懈地努力，引導 AutoWeb 度過這些困難時期，同時非常注意我們的成本結構以節省現金。

I will return to discuss how we view our path forward. But I'm going to pass it over to Carlton to walk us through the first quarter financial results in a bit more detail. Carlton, over to you.

我將回來討論我們如何看待我們的前進道路。但我將把它交給卡爾頓，讓我們更詳細地了解第一季的財務表現。卡爾頓，交給你了。

Thank you, Jared, and good afternoon, everyone. Let's jump right into our first quarter results. Total revenue in the first quarter increased 7% to $19.1 million from $17.8 million last quarter and from $17.9 million in the year ago quarter. The increase was primarily the result of the incremental revenue generated through the company's used vehicle acquisition business, offset by lower volume in our leads business.

謝謝賈里德，大家下午好。讓我們直接進入第一季的業績。第一季總營收成長 7%，從上一季的 1,780 萬美元和去年同期的 1,790 萬美元增至 1,910 萬美元。這一增長主要是由於公司二手車收購業務產生的收入增量，但被我們的銷售線索業務量下降所抵消。

Industry challenges continued to impact our automotive digital marketing segment, which for the first quarter totaled $14.7 million, up from $14.1 million in the last quarter and down from $17.9 million in the year ago quarter. Within the automotive digital marketing segment, our leads revenue in the first quarter totaled $10.6 million, which is down compared to both $10.7 million in the last quarter and $14.2 million in the year ago quarter.

產業挑戰持續影響我們的汽車數位行銷部門，第一季的總收入為 1,470 萬美元，高於上一季的 1,410 萬美元，也低於去年同期的 1,790 萬美元。在汽車數位行銷領域，我們第一季的銷售收入總計 1,060 萬美元，較上一季的 1,070 萬美元和去年同期的 1,420 萬美元有所下降。

Total retail dealer count for the first quarter came in at 1,589 dealers, up slightly from 1,581 in Q4 and down from 1,777 in the year ago quarter.

第一季零售經銷商總數為 1,589 家，略高於第四季的 1,581 家，略高於去年同期的 1,777 家。

Moving to our digital advertising revenues, primarily click revenue within the automotive digital marketing segment. In the first quarter, digital advertising grew to $4.1 million, an increase of 21% from $3.4 million in the fourth quarter and 12% from $3.7 million in the year ago quarter.

轉向我們的數位廣告收入，主要是汽車數位行銷領域的點擊收入。第一季度，數位廣告成長至 410 萬美元，比第四季的 340 萬美元成長 21%，比去年同期的 370 萬美元成長 12%。

Turning to the gross profit line. Our consolidated first quarter gross profit was $3.9 million, which was up from $3.5 million in the last quarter and down from $5.8 million in the year ago quarter. First quarter gross margin came in at 20.5%, which was up from 19.8% last quarter and down from 32.5% in the year ago quarter. The decrease compared to the year ago quarter is driven by an increase of attributable to revenue from our used vehicle acquisition business, which inherently comes in at lower margins.

轉向毛利線。我們第一季的綜合毛利為 390 萬美元，高於上一季的 350 萬美元，低於去年同期的 580 萬美元。第一季毛利率為 20.5%，高於上季的 19.8%，低於去年同期的 32.5%。與去年同期相比下降的原因是我們二手車收購業務的收入增加，而該業務的利潤率本來就較低。

Margins in this business were compressed this quarter due to staffing challenges and as we refined our overall operating process. Consolidated operating expenses for the first quarter were $7.8 million compared to $5.9 million in the fourth quarter and $6.9 million in the year ago quarter. The increased spending was due to the timing of expense adjustments for the company's discretionary annual incentive compensation plan as well as additional personnel costs primarily in the used vehicle acquisition business.

由於人員配置方面的挑戰以及我們改善整體營運流程，本季該業務的利潤率有所壓縮。第一季的綜合營運費用為 780 萬美元，而第四季的綜合營運費用為 590 萬美元，去年同期的綜合營運費用為 690 萬美元。支出增加的原因是公司酌情年度激勵薪酬計劃的費用調整時間以及主要在二手車收購業務中的額外人員成本。

Consolidated net loss in the first quarter was $4.3 million or $0.32 per share compared to a net loss of $2.6 million or $0.28 per share last quarter and net income of $300,000 or $0.02 per share in the year ago quarter. The decrease was driven by the aforementioned decline in gross profit and increase in operating expenses along with the $1.4 million benefit related to the forgiveness of the company's DPP loan included in the prior year period.

第一季合併淨虧損為 430 萬美元，即每股 0.32 美元，而上一季的淨虧損為 260 萬美元，即每股 0.28 美元，去年同期的淨利潤為 30 萬美元，即每股 0.02 美元。下降的原因是上述毛利下降和營運費用增加，以及與上一年期間公司 DPP 貸款減免相關的 140 萬美元收益。

Adjusted EBITDA in the first quarter was a loss of $2.8 million compared to a loss of $1.3 million in the last quarter and a gain of $200,000 in the year ago quarter. At March 31, 2022, cash and cash equivalents and restricted cash stood at $8.1 million compared to $11.6 million at December 31, 2021. Our cash and cash equivalents net of restricted cash stood at $3.8 million at March 31, 2022, down from -- down $3.5 million from December 31, 2021.

第一季調整後 EBITDA 虧損 280 萬美元，而上一季虧損 130 萬美元，去年同期獲利 20 萬美元。截至2022年3月31日，現金及現金等價物以及限制性現金為810萬美元，而2021年12月31日為1,160萬美元。截至2022年3月31日，扣除限制性現金後，我們的現金而現金等價物為380萬美元，低於——較 2021 年 12 月 31 日減少 350 萬美元。

At March 31, 2022, we had an outstanding balance of $9.1 million on our revolving credit facility with CIT Northbridge Credit compared to $10 million at December 31, 2021. As Jared mentioned earlier, the Board of Directors has established a special committee to explore strategic alternatives for the company.

截至2022 年3 月31 日，我們與CIT Northbridge Credit 的循環信貸額度的未償餘額為910 萬美元，而2021 年12 月31 日為1,000 萬美元。正如賈里德之前提到的，董事會成立了一個特別委員會來探索策略公司的替代方案。

As we have previously disclosed, our credit facility with CIT Northbridge Credit expires in March of 2023. While we plan to work to extend that agreement, we are also experiencing cash burn in excess of what we had originally planned. As a result, without an infusion of capital or some other transaction, the company may not have the cash needed to continue operations.

正如我們先前所揭露的，我們與 CIT Northbridge Credit 的信貸安排將於 2023 年 3 月到期。雖然我們計劃努力延長協議，但我們的現金消耗也超出了我們最初的計劃。因此，如果沒有資本注入或其他交易，公司可能沒有繼續運作所需的現金。

To this end, we have included disclosures around going concern in our 10-Q. The Special Committee will consider a full range of operational, financial and other strategic alternatives in their process. While we cannot assure that this work will result in a successful outcome, we have committed to a diligent cost management structure and remain focused on operating in a lean and efficient manner as we move forward. That concludes my remarks.

為此，我們在 10 季報告中納入了有關持續經營的揭露。特別委員會將在其進程中考慮全方位的業務、財務和其他策略替代方案。雖然我們不能保證這項工作會成功，但我們致力於建立勤奮的成本管理結構，並在前進過程中繼續專注於以精益和高效的方式運作。我的發言到此結束。

I'm going to pass the call back to Jared to provide commentary on our strategic efforts and path forward.

我將把電話轉給賈里德，就我們的戰略努力和前進道路提供評論。

Thanks, Carlton. All right. So what happens next for AutoWeb? With our special committee beginning the evaluation process, they will consider a full range of strategic alternatives. In fact the Special Committee has already retained Houlihan Lokey Capital as our financial adviser to assist in this process.

謝謝，卡爾頓。好的。那麼 AutoWeb 接下來會發生什麼事？隨著我們的特別委員會開始評估過程，他們將考慮全方位的策略選擇。事實上，特別委員會已經聘請了Houlihan Lokey Capital 作為我們的財務顧問，以協助這一過程。

All options are currently on the table, including attempting to obtain debt or equity financing, exploring the sale or divestiture of the business, evaluating potential partnership or licensing transactions or the restructuring of our debt and operations. While we don't have a definitive timeline or anticipate the completion date for this process, the special committee is proceeding in a timely manner given the current financial constraints on our operations.

目前所有選項都已擺在桌面上，包括嘗試獲得債務或股權融資、探索出售或剝離業務、評估潛在的合作夥伴關係或許可交易或重組我們的債務和業務。雖然我們沒有明確的時間表或預計這一過程的完成日期，但鑑於我們目前營運的財務限制，特別委員會正在及時開展工作。

As the special committee moves forward and its strategic alternative -- with its strategic alternative review, we plan to keep a watchful eye on our cash position while operating our leads and clicks business, in line with overall market conditions. The identity of our core business has not changed. AutoWeb plans to continue providing high-quality consumer leads and clicks to help connect dealers to motivated car buyers, while our used vehicle operations will remain suspended until further notice.

隨著特別委員會的推進及其戰略替代方案——透過策略替代方案審查，我們計劃在運營我們的潛在客戶和點擊業務時密切關注我們的現金狀況，以符合整體市場狀況。我們的核心業務的身份沒有改變。 AutoWeb 計劃繼續提供高品質的消費者線索和點擊，以幫助經銷商與積極的汽車購買者建立聯繫，而我們的二手車業務將繼續暫停，直至另行通知。

I want to reiterate that we believe there is substantial value in the assets and capabilities of AutoWeb. Between our highly efficient audience generation capabilities, our large distribution channel, our dedicated and talented team and our proven ability to acquire used vehicles directly from consumers, we're optimistic that the strategic review will result in a positive outcome.

我想重申，我們相信 AutoWeb 的資產和能力具有巨大的價值。憑藉我們高效的受眾生成能力、龐大的分銷渠道、敬業且才華橫溢的團隊，以及我們直接從消費者那裡購買二手車的成熟能力，我們樂觀地認為戰略審查將產生積極的結果。

This is obviously not where we envisioned we'd be when we embarked on our transformation strategy. But as I've said before in past calls, we can't control the markets. We can't control the rate of inflation, interest rates, the supply chain or new vehicle inventories. What we can do is continue to put our heads down and run this business as efficiently as possible from a cash and expense perspective while continuing to provide our customer base with high-quality leads and clicks.

這顯然不是我們在開始實施轉型策略時所設想的情況。但正如我之前在過去的電話會議中所說，我們無法控制市場。我們無法控制通貨膨脹率、利率、供應鏈或新車庫存。我們能做的就是繼續埋頭苦幹，從現金和費用的角度盡可能高效地經營這項業務，同時繼續為我們的客戶群提供高品質的潛在客戶和點擊。

We still firmly believe in the underlying long-term value of our technology, assets and capabilities, along with the utility we provide, the automotive market in the digital age. We're confident that consumers will continue to adopt and leverage digital media tools as they go through the lifecycle of buying and selling vehicles. And we still believe that AutoWeb's platform is capable of capitalizing on the intersection of vehicle buyers and sellers.

我們仍然堅信我們的技術、資產和能力以及我們提供的實用性以及數位時代汽車市場的潛在長期價值。我們相信，消費者在購買和銷售車輛的生命週期中將繼續採用和利用數位媒體工具。我們仍然相信 AutoWeb 的平台能夠充分利用汽車買家和賣家的交叉點。

We have a resilient and nimble team that is working diligently to sustain our core operations with the hopes that we will be able to return to executing our transformation and ultimately recognize the untapped potential of AutoWeb.

我們擁有一支堅韌而靈活的團隊，他們正在努力維持我們的核心運營，希望我們能夠重新執行轉型並最終認識到 AutoWeb 尚未開發的潛力。

I'd like to sincerely thank all of our dedicated employees and our long-term stakeholders who have provided unwavering support during these exceptionally challenging and trying times.

我衷心感謝我們所有敬業的員工和長期利益相關者，他們在這個異常充滿挑戰和艱難的時期提供了堅定不移的支持。

With that, we'll now open it up for questions. Operator?

現在，我們將開放提問。操作員？

(Operator Instructions) For our first question, we have Eric Martinuzzi from Lake Street.

（操作員說明）對於我們的第一個問題，我們有來自 Lake Street 的 Eric Martinuzzi。

My first question is regarding the going concern, given the cash at $3.8 million and the revolver at $9.1 million. Just curious to know what are we talking about here? Obviously less than 12 months, but given the moves that you've made, what are we looking at, how many quarters here before we need to get something done on the balance sheet?

我的第一個問題是關於持續經營的問題，因為現金為 380 萬美元，左輪手槍為 910 萬美元。只是想知道我們在這裡談論什麼？顯然不到 12 個月，但考慮到你們所採取的行動，我們在關注什麼，需要多少個季度才能在資產負債表上完成一些工作？

Eric, thank you for the question, by the way. That's just a very difficult question to answer, quite frankly, because it all depends on how well we're able to operate and execute with our existing customer base. As you know, when you follow a going concern, it can create risk from an employee's perspective and from a customer perspective. And so while we have several contingencies, we aren't prepared to provide that level of guidance at this particular moment. But we are committed as a team to making certain that we give the strategic options and strategic review, plenty of time for us to achieve a positive outcome.

艾瑞克，順便說一句，謝謝你的提問。坦白說，這是一個非常難以回答的問題，因為這完全取決於我們對現有客戶群的營運和執行能力。如您所知，當您追蹤持續經營的企業時，從員工和客戶的角度來看，它可能會產生風險。因此，雖然我們有一些意外情況，但我們不准備在這個特定時刻提供這種程度的指導。但我們作為一個團隊致力於確保我們提供策略選擇和策略審查，讓我們有足夠的時間取得積極的成果。

And then regarding CarZeus, I feel like we were -- it feels like we just had the Q4 call recently. At what point did we decide to suspend the CarZeus operations?

關於 CarZeus，我覺得我們最近剛進行了第四季的電話會議。我們什麼時候決定暫停 CarZeus 營運？

That was very recently. It was very recently. As you can imagine, we've been working through this for a while now. We actually were very close to putting in place bridge financing. Unfortunately, the bridge financing fell through for no reason of our control, which forced us into a position where we had to make these sorts of very difficult decisions. So we did not make a decision to suspend the CarZeus operations until very recently.

那是最近的事。那是最近的事。正如您可以想像的那樣，我們已經解決這個問題已經有一段時間了。事實上，我們非常接近落實過橋融資。不幸的是，過橋融資在我們無法控制的情況下失敗了，這迫使我們不得不做出這種非常困難的決定。因此，直到最近我們才做出暫停 CarZeus 營運的決定。

Like I said, as a matter of fact, last month, in April, these are operational numbers, these are not GAAP numbers. But we bought north of 110 cars, which was by far the best month that we've had and we were on a similar trajectory this month. The fundamental issue is that it's just a fairly high intensity consumer of cash, which is why we have to suspend operations and furlough those team members, so we can focus on the leads and clicks business until we find a positive outcome and then hopefully reestablish operations in vehicle, used vehicle acquisitions.

就像我說的，事實上，上個月，四月份，這些是營運數據，不是 GAAP 數據。但我們購買了超過 110 輛汽車，這是迄今為止我們度過的最好的一個月，而且本月我們也處於類似的軌跡。根本問題是，它只是相當高強度的現金消耗，這就是為什麼我們必須暫停營運並讓這些團隊成員休假，這樣我們就可以專注於潛在客戶和點擊業務，直到我們找到積極的結果，然後希望重新恢復營運在車輛方面，二手車收購。

And then what should we -- as far as a run rate operating expense, obviously, we've got duplicative costs here in the second quarter, but maybe it's a question for Carlton. What's the cost to restructuring operating expense?

然後我們應該做什麼 - 就運行率運營費用而言，顯然，我們在第二季度有重複成本，但這也許是卡爾頓的問題。重組營運費用的成本是多少？

Yes. I mean what we think of guidance to that level. I mean, we are going through and looking at the various spend categories that we can reduce to accomplish the goals that were set out by the strategic alternates and the committee.

是的。我的意思是我們對這水平的指導的看法。我的意思是，我們正在仔細研究並研究可以減少的各種支出類別，以實現策略候補人員和委員會制定的目標。

And as you said, it was not all bad news in the quarter. It seems strange to me that your lead traffic was up, but your lead volumes were flat sequentially. What's behind that?

正如您所說，本季並非全是壞消息。我覺得奇怪的是，你們的潛在客戶流量上升了，但你們的潛在客戶量卻連續持平。這背後是什麼？

We've been making several changes to actually how we optimize the funnel. And that is one of the things that's going to be masked by this call is there are several green shoots inside the business. One of them being our conversion rate was up well, current quarter, up about 30%. And so we were making modifications throughout the quarter in terms of how we actually structured the operating team who buys our traffic, how they manage their campaigns and introducing some new funnel optimization approaches that took a little bit of time but are now yielding some real material benefits. But it was a bunch of changes being made on that side of the business. I think you recall that we've recently hired someone new over on that side. And he's having a positive impact on that side of the business. But you'd see, is making quite a few changes that -- in clicks and takes wise is actually positive for us, but did mask some of the goodness in the quarter.

我們已經對優化頻道的實際方式進行了一些更改。這次電話會議將掩蓋的事情之一是，該行業內部出現了一些新芽。其中之一是我們的轉換率上升良好，本季上升了約 30%。因此，我們在整個季度中對購買流量的營運團隊的實際結構、他們如何管理行銷活動以及引入一些新的通路優化方法進行了修改，這些方法花費了一點時間，但現在正在產生一些真實的材料好處。但業務方面正在發生一系列變化。我想你還記得我們最近在這方面僱用了一個新人。他對這方面的業務產生了積極的影響。但你會看到，正在做出相當多的改變——在點擊量和獲取量方面實際上對我們來說是積極的，但確實掩蓋了本季度的一些好處。

Well, good luck on the pivot here and the strategic alternatives review process.

好吧，祝這裡的支點和策略替代方案審查過程好運。

For our next question, we have Gary Prestopino from Barrington Research.

對於我們的下一個問題，我們有來自 Barrington Research 的 Gary Prestopino。

Jared, good to hear from you. A couple of questions here, please. First of all, is the gross margin degradation in the quarter versus Q1 '21, is that all due to the impact of CarZeus?

賈里德，很高興收到你的來信。請教幾個問題。首先，與 21 年第一季相比，本季的毛利率下降是否都是因為 CarZeus 的影響？

Carlton wants to take that one.

卡爾頓想接受那個。

It's not all due to CarZeus. It is significantly due to CarZeus, but there was also a degradation in the core business as well.

這並不全是 CarZeus 的功勞。這在很大程度上是由於 CarZeus 造成的，但核心業務也出現了下滑。

We saw a bit -- I'm sorry to interrupt. We saw a bit of an expansion in our TAC in Q3 and Q4 of last year. Early in Q1, it was elevated as well in similar levels to Q3 and Q4. We've been managing it down since then. And so you've got a bit of a mixed bag in the quarter of our consumer acquisition costs, which did impact the gross margin on a per unit basis for the leads business. But like I said, for what it's worth, end of the quarter, we finished on a positive note. And into this quarter, we're doing a really nice job of managing it. But you have a bit of inflation there in January and February and half of March.

我們看到了一點——很抱歉打斷一下。去年第三季和第四季，我們的 TAC 有所擴大。在第一季初期，它也以與第三季和第四季相似的水平上升。從那時起我們就一直在控制它。因此，我們這個季度的消費者獲取成本有點參差不齊，這確實影響了潛在客戶業務的單位毛利率。但正如我所說，無論其價值如何，到本季末，我們都取得了積極的成果。進入本季度，我們在管理方面做得非常好。但一月、二月和三月中旬會有一點通貨膨脹。

Could -- Carlton, could you explain what -- I'm sorry, I didn't get this. What is the restricted cash on the balance sheet? What's that held for, is that CarZeus?

卡爾頓，你能解釋一下嗎——抱歉，我沒聽懂。資產負債表上的受限現金是多少？那是做什麼用的，是 CarZeus 嗎？

So there's $4.3 million in restricted cash on the balance sheet. Approximately $4 million of it at this point is used as collateral within the CIT loan. So it's the right collateral that supports the loan balance.

因此資產負債表上有 430 萬美元的受限現金。目前，其中約 400 萬美元被用作 CIT 貸款的抵押品。因此，正確的抵押品可以支持貸款餘額。

So have you -- did you -- have you tripped -- was there -- are there any covenants or things that you've tripped under this revolving credit facility at this point?

那麼，你是否——你——你是否絆倒了——是否有——此時，你是否在這種循環信貸安排下絆倒了任何契約或事情？

There are not. There are no covenants that we tripped.

沒有。我們沒有違背任何契約。

So if you've got -- you've got restricted cash as collateral of $4.3 million that would be applied directly to the borrowing. That could be applied directly to the borrowings under the revolving credit facility, if you were to get some new financing in?

因此，如果您有 430 萬美元的受限現金作為抵押品，將直接用於借款。如果您要獲得一些新的融資，這可以直接應用於循環信貸安排下的借款？

Yes. $3.3 million of that goes to securing credit port.

是的。其中 330 萬美元用於確保信貸港的安全。

So the last question I would have is this. This tax preservation plan, you've got $110 million of NOLs, which on a per share basis is about $7.87. I don't understand all of this language here, the risk ownership under Section 382 of the IRS code. But is that -- what you've done there, does that pertain to anybody trying to take a 5% stake in your company without the Board agreeing to it?

所以我要問的最後一個問題是這個。透過這項稅收保留計劃，您將獲得 1.1 億美元的 NOL，以每股計算約為 7.87 美元。我不明白這裡所有的語言，即 IRS 法規第 382 條下的風險所有權。但是，您在那裡所做的事情是否適用於任何未經董事會同意而試圖持有您公司 5% 股份的人？

Yes. The threshold for the NOL plan is roughly 4.9%. Nobody can acquire more than that.

是的。 NOL計劃的門檻約為4.9%。沒有人能獲得比這更多的東西。

So if the Board agreed to somebody coming in and buying more, that NOL is still applicable if there's a change of control clause in there. Is that correct?

因此，如果董事會同意有人進來購買更多產品，並且其中存在控制權變更條款，那麼 NOL 仍然適用。那是對的嗎？

Yes, it's a little bit more complex than that, Gary. Essentially, your NOLs will get reset. I guess here's the way I would answer it. It is reset on the transaction value. Here's the way I would say it is. We've got $110 million of NOL value inside the business. That is something that should be attractive even if it doesn't -- even if all of it doesn't make the transition through a change of control transaction, there still is real value there. And so as we think about the strategic alternatives, it is all the things that I mentioned in terms of the core operations. But to your point, there is also NOL plan value there for somebody else who would be looking to merge with us or do something like that.

是的，情況比這更複雜一點，加里。本質上，您的 NOL 將被重置。我想這就是我回答這個問題的方式。它根據交易值重置。我就是這麼說的。我們的業務內 NOL 價值為 1.1 億美元。這應該是有吸引力的，即使它沒有——即使所有這些都沒有透過控制權交易的變更來實現過渡，那裡仍然有真正的價值。因此，當我們考慮戰略選擇時，這就是我在核心業務方面提到的所有內容。但就你的觀點而言，對於其他想要與我們合併或做類似事情的人來說，NOL 計畫也有價值。

Agree. Okay. Okay. And then you start to get into a whole bunch of tax issues to how much they could use. But suffice to say there is value and if your Board of Directors, so chooses to exercise or get rid of that 4.9% threshold, that there is inherent value there. I mean, because your equity value of your company, your market -- your enterprise value of the company is like $35 million or something like that?

同意。好的。好的。然後你開始陷入一大堆關於他們可以使用多少的稅務問題。但足以說明它是有價值的，如果你的董事會選擇行使或取消 4.9% 的門檻，那麼那裡就有內在價值。我的意思是，因為你公司的股權價值、你的市場——你公司的企業價值大約是 3500 萬美元或類似的東西？

Yes. Yes. No, absolutely. Absolutely and again, when we had a conversation, as you can imagine, we picked up with Houlihan Lokey. And that's one of the things that they pointed out as well as there's real value in this asset, real value in this business. And we're optimistic that we're going to be able to find somebody who wants to either invest or figure out a way to converge it into their platform.

是的。是的。不，絕對是。絕對是，當我們進行對話時，正如你可以想像的那樣，我們接聽了Houlihan Lokey。這是他們指出的事情之一，這項資產具有真正的價值，而這項業務具有真正的價值。我們樂觀地認為，我們將能夠找到想要投資或想辦法將其整合到他們的平台中的人。

I understand. That's why I was -- this is the first thing I looked at when I saw this, I said, okay, you've got this NOL. There is some value here besides the base business? And then just very briefly, so I can understand it again. I'm trying to get a handle on this. When you're talking about your CAC, your customer acquisition costs; that diminishes your margin. That's going up because it's such a competitive environment right now? Or you're having to discount your leads to get your leads taken by the auto retailers?

我明白。這就是為什麼我——這是我看到這個時看到的第一件事，我說，好吧，你已經得到了這個 NOL。除了基礎業務之外，這裡還有其他價值嗎？然後只是非常簡短，這樣我就能再次理解它。我正在努力解決這個問題。當您談論 CAC 時，您的客戶獲取成本；這會減少你的利潤。這個數字之所以上升，是因為現在競爭環境如此激烈嗎？或者您必須打折您的銷售線索才能讓汽車零售商佔據您的銷售線索？

No, great question, Gary. No, it's -- there's a couple of things at play that we've talked to them. One is we had elevated expense levels in Q3, Q4 and early Q1 because of the competitive nature of the market and also because of some executional issues that we've since resolved. Now on the revenue side, our revenue is somewhat diminished right now because we have talked revenue per unit. It's so much mine because as we've talked about, we still do have a material number of retail dealers who are in suspend status. And as you know, right, the difference between self-selling a lead wholesale and retail is material in this business.

不，很好的問題，加里。不，我們已經與他們討論了一些正在發揮作用的事情。一是由於市場的競爭性質以及我們此後解決的一些執行問題，我們在第三季、第四季和第一季初的費用水平較高。現在在收入方面，我們的收入現在已經減少，因為我們已經討論了單位收入。這很大程度上是我的，因為正如我們所討論的，我們仍然有大量處於暫停狀態的零售經銷商。如您所知，自營銷售線索批發和零售之間的區別在這個行業中是很重要的。

And so you're seeing some downward pressure. That's not new downward pressure. We've had that months now because of the ongoing pandemic and inventory shortages. And so what we've been able to do is manage the expense side down on the lead side from a cost perspective and, call it, at the end of the quarter and into this quarter. And we've gotten back to rates that we saw when we were cash flow positive and adjusted EBITDA profitable mid last year. And so we've been able to manage it back and still hold on to our quality. We haven't to give up a little bit of volume. But on a pure gross margin basis, we're actually seeing positive trends. Again, it's just not enough fast enough for the inventory-related headwinds that we're continuing to experience.

所以你會看到一些下行壓力。這並不是新的下行壓力。由於持續的大流行和庫存短缺，我們已經度過了這幾個月。因此，我們能夠做的就是從成本的角度來管理費用方面的領先方面，並稱之為，在季度末和本季度。我們已經恢復到去年年中現金流為正且調整後 EBITDA 獲利時的水平。因此，我們能夠重新管理它並仍然保持我們的品質。我們不必放棄一點數量。但就純毛利率而言，我們實際上看到了積極的趨勢。同樣，對於我們繼續經歷的與庫存相關的不利因素來說，它的速度還不夠快。

Yes, now, it's a tough environment, no doubt.

是的，毫無疑問，現在的環境很艱難。

And for our next question, we have Edward Woo from Ascendiant Capital.

對於我們的下一個問題，我們有來自 Ascendiant Capital 的 Edward Woo。

Yes. You mentioned that January was relatively better, but February and March deteriorated. What about April and May so far?

是的。你提到一月相對好一些，但是二月、三月則惡化了。到目前為止，四月和五月怎麼樣？

So from a pure just vehicle sales perspective, they're not much better, quite frankly. But from an operating execution perspective, they've been better. Like I said, one of the most frustrating parts of all this that is there were green shoots in the quarter, it's not enough. And we're seeing green shoots in this quarter, but it's not enough to overcome the headwinds that we're seeing. So from a SAAR perspective, we're seeing similar numbers. But what we have been able to do in the first couple of months here, a month, 1.5 months here, is we have seen that our gross margin dollars generated for leads has been better and up.

因此，坦白說，從純粹的汽車銷售角度來看，它們並沒有好多少。但從營運執行的角度來看，他們做得更好。就像我說的，這一切中最令人沮喪的部分之一是本季出現了萌芽，但這還不夠。我們在本季度看到了萌芽，但這還不足以克服我們所看到的阻力。因此，從 SAAR 的角度來看，我們看到了類似的數字。但我們在前幾個月（一個月、1.5 個月）所能做的是，我們看到我們為銷售線索產生的毛利率已經更好，而且有所上升。

But again, you're talking about substantial declines when you compare it to Q2 and Q1 of last year because the SAAR was so much more elevated than it is today. So even though we are doing better on a per unit basis from a lead and click perspective, just in total, it's still down.

但同樣，當您與去年第二季和第一季度進行比較時，您談論的是大幅下降，因為 SAAR 比今天高得多。因此，儘管從潛在客戶和點擊量的角度來看，我們在每單位基礎上做得更好，但總體而言，它仍然下降。

And then looking at CarZeus. I know you guys suspend operations, but it looks like gross margin for the first quarter was down. Is there anything to read into that?

然後看著CarZeus。我知道你們暫停運營，但看起來第一季的毛利率下降了。有什麼值得解讀的嗎？

Just operational execution issues like Carlton said. We had some rolling COVID issues where we had to shut the office down a little bit. We were doing some hiring as well and that's a different kind of hiring than we historically have done. And so we're working our ways through that. And system operational execution issues as we pushed to ramp up volume, where we saw margin per unit decline. But again, for what it's worth and in the month of April, we saw that bounced back a bit, and we're making good positive progress, and just not fast enough.

正如卡爾頓所說，只是營運執行問題。我們遇到了一些滾動的新冠問題，我們不得不暫時關閉辦公室。我們也進行了一些招聘，這與我們以往的招聘方式不同。所以我們正在努力解決這個問題。當我們努力提高銷售量時，系統營運執行出現問題，單位利潤率下降。但話又說回來，就其價值而言，在四月份，我們看到了一點反彈，我們正在取得良好的積極進展，但速度還不夠快。

I wish you guys good luck with your strategic review.

我祝你們戰略審查順利。

And again, I just want to reiterate, we feel really strongly about the car buying side of the business. It's attractive. It's interesting. We proved that it works within our environment. Again, we just had work to do on that.

我想再次重申，我們對汽車購買業務的感受非常強烈。很有吸引力。這真有趣。我們證明它在我們的環境中有效。再說一次，我們只是有工作要做。

Okay. Operator, any other questions?

好的。接線員，還有其他問題嗎？

We don't have any further questions at this time. This concludes our question-and-answer session. I would now like to turn the call over back to you, Mr. Rowe, for closing remarks.

目前我們沒有任何進一步的問題。我們的問答環節到此結束。羅先生，我現在想將電話轉回給您，請您發表結束語。

Okay. Again, I just want to thank everybody. I want to thank our stakeholders. I want to thank our employees. As I mentioned earlier, we believe strongly in the value of this asset. We believe strongly in the ability for this business to positively impact the automotive ecosystem. Thank you for all your support. We appreciate it. And we look forward to speaking with you again soon. Okay. Thanks, everybody.

好的。再次，我想感謝大家。我要感謝我們的利害關係人。我要感謝我們的員工。正如我之前提到的，我們堅信這項資產的價值。我們堅信該業務有能力對汽車生態系統產生正面影響。感謝你的支持。我們很感激。我們期待很快再次與您交談。好的。謝謝大家。

Ladies and gentlemen, this concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation.

女士們、先生們，今天的電話會議到此結束。此時您可以斷開線路。感謝您的參與。