IRVINE, Calif. — Autobytel Inc. reported a 26% increase in revenue for the third quarter of 2014 to $27.4 million, reaching its highest quarterly revenue since before the Great Recession. The lead provider cited its acquisition of AutoUSA earlier this year and an uptick in the volume and quality of its internally-generated leads as reasons for the increase.
During a quarterly earnings conference call on Nov. 5, Autobytel President and CEO Jeff Coats said the company has grown the number of leads its generates internally from 3% six years ago to nearly 70% today. “Our ability to generate leads internally has had a meaningful impact on several areas of our business,” he said.
One of those impacts has been on the quality of the leads Autobytel provides, which have an average buy rate of 25% — meaning that of 100 new vehicle leads delivered to dealers, 25 of these consumers will purchase a new vehicle within 90 days. The leads internally generated by Autobytel have a buy rate of 21%.
“This is three times better than the estimated average for our industry,” Coats noted. “We believe this is a direct result of our ability to generate the substantial majority of auto leads internally.”
The lead provider has also launched several products aimed at dealers, including Autobytel Mobile and SaleMove, which Coats said are still relatively small but growing. The revenue generated from both leads and services increased 28% in the third quarter to $24.5 million, up from $19 million one year ago.
Coats also said he wasn’t worried about dealers moving away from third-party lead providers, even after AutoNation announced it would be cutting spending on such services. Autobytel saw a 69% increase in revenue from dealers in the third quarter compared to last year.
“We have comments from people like [AutoNation’s] Mike Jackson related to third-party leads … and a lot of focus on more dealers wanting to try to generate traffic to their own websites,” Coats said. “However, for most organizations, that takes a relatively extended amount of time. And it’s pretty expensive and doesn’t really generate a very good ROI for quite a while.
“So, we tend to think and we've seen already...some benefits from this — that in fact dealers will come back to third-party leads because third-party leads are in fact their best and highest return on investment for what they’re getting, whether it’s $20, $25 or even $30 for a lead. It’s a great return for a dealer.”
Coats went on to discuss the company’s acquisition of AutoUSA, noting that the business is now fully integrated into Autobytel after the lead provider cut 75% of the $6 million in operating expenses. AutoUSA’s revenue was on the decline due to “higher than average dealer churn,” but Coats said the acquisition has been positive for Autobytel.
“Even at the current annual revenue run rate of approximately $16 million, we paid what we believe was a very attractive price based on the synergies we realized and the value we continue to drive as a result of the acquisition,” he added. “I’ll say it again because it bears repeating — AutoUSA significantly enhanced our competitive position and created a more solid platform from which we can continue to grow.”
Originally posted on F&I and Showroom