AutoWeb, Inc.

Good afternoon, everyone, and thank you for participating in today's conference call to discuss AutoWeb's financial results for the third quarter and its September 30th, 2021. Joining us today are AutoWeb's president and CEO, Jared Rowe, the company's CFO, Michael Sadowski, and the company's outside investor relations advisor, Cody Cree, with Gateway Investor Relations. Following their remarks, we'll open the call for your questions. I would now like to turn the call over to Mr. Cree for some introductory comments.

Thank you, Daniel. 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. 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 quarter ended September 30, 2021, which was filed prior to this call, 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. 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. The reconciliation of this non-GAAP financial measure to the most directly comparable GAAP measure in 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. And with that, I will now turn the call over to Jared.

Thanks, Cody. Good afternoon, everybody. So we continue to make some really solid progress in our business transformation during the third quarter. You know, despite some significant headwinds from supply constraints throughout the automotive industry, which really did diminish new vehicle inventory and production levels, which tended to offset our seasonal strength that we typically experience during Q3. But year over year, growth trends in our click metrics demonstrate to us the consumer demand remains robust among intent car buyers. We continue to swiftly integrate the and scale, Car Zeus, which is our new vehicle acquisition and resale product or segment. Mike will talk more about that. To help address this demand and establish our foothold within the used vehicle acquisition business. Now, we believe that the customer acquisition efficiencies and platform enhancements we've built have given us a strong foundation for growing our vehicle acquisition business and driving completed used vehicle transactions from start to finish. Now, before we discuss this transformation and our performance during the quarter in greater depth, let me first provide some additional context on the state and evolution of today's vehicle buying dynamics. Retail dealers and OEMs continue to be challenged by widespread pandemic-related supply shortages, including the ongoing semiconductor and microchip shortage. These disruptions are still constricting new car production levels and overall vehicle availability, with Bloomberg Intelligence estimating that the number of used and new cars on dealership lots fell by a third of last year's levels. Individual dealers and OEMs have limited visibility and control over their supply chain conditions, which likely will not normalize for several periods. Even when supply chain constraints do begin to ease, this doesn't mean that new car inventory levels will immediately surge. Rebounding demand among in-market vehicle shoppers has created backlogs for specific vehicle models at the dealership level. So, Once the vehicle supply chain normalizes, dealers will need to first fill the orders of customers who have already put down deposits or signed up for wait lists before they fully replenish their lots. Conversely, the market conditions that have hampered new vehicle transactions have spurred the growth and urgency of used car transactions. Within a ramping demand environment, according to data from the Federal Reserve of St. Louis and talks on the motive of the promotion of used car sales, the Used car SAR, as a percent of total SAR, new and used, has risen from approximately 69% in January to about 75% at the beginning of September. In parallel, used car and truck prices increased by approximately 32% year over year. And this is according to the latest U.S. Department of Labor data. Now, these evolving market conditions within our industry complement the evolution that we're driving in our own business. As we've shared over the past three years, the initial phases of our transformation strategy are focused on improving our core business. We've meaningfully improved our consumer-facing platform experience. We've accelerated our innovation cycle, and we've enhanced our offerings by layering in retail-ready components such as finance platform functionality and the CarZoom vehicle buying service to ultimately provide a more tailored experience for consumers and really a a more sophisticated way of helping them complete their vehicle transactions. Now, with this kind of work in place, we're well-positioned to progress into the next phase of becoming an automotive matchmaker. Through integrating and scaling CarZeus, our used vehicle acquisition and resale business, we aim to use our digital retailing advantages to begin directly fulfilling matches for our network of in-market car buyers. Now, while there are others who – who buy cars directly from consumers, we believe that we have an advantage in that we have an established and expanding suite of resources dedicated to identifying and retaining in-market consumers. Our proven customer acquisition efficiencies have helped us build an optimal audience for our ramping vehicle acquisition business, which is an audience of in-market consumers that we can support through the entire transaction phase, from disposing of their current vehicle to evaluating and acquiring a new one. Having this capability positions us to both fulfill consumer demand directly and provide retail and wholesale dealers with additional sources of inventory. Furthermore, it transforms us into a first-party participant in the used car transaction process, allowing us to both leverage the current advantageous dynamics in that market and emerge from the challenges in the new car market with a stronger foundation and a more comprehensive value proposition. This third-party audience efficiency matched with first-party monetization is a very important point, and it's something that you're going to hear us talk an awful lot about over the next several periods. Now, most traditional media companies will always stay media companies. However, that's not the path that we've chosen. The total addressable market for automotive digital advertising is about $15 billion, according to eMarketer. By contrast, our business transformation allows us to address a far larger market than we would by simply focusing on our legacy marketing offerings. We believe that our platform offers a more tailored funnel approach to acquiring traffic and consumer leads than what larger media-only players can provide, which gives us greater flexibility to evolve our business beyond the media roots. In fact, in September, a research report from Brian Pass Enterprises found that our click traffic generation product alone drives greater levels of quality, value, and shopper interaction than broader dealer-funded Google SEM campaigns. The reason is that these dealer-funded Google SEM campaigns tend to capture more consumers seeking basic service and administrative functions for their vehicles than active vehicle shoppers. With our concentrated approach, we have acquired an expansive and growing audience of active, action-minded car buyers to leverage as we enter the vehicle acquisition business, which is estimated to have a total addressable market of approximately $230 billion. As you can see, we've expanded our total addressable market substantially. By transforming our business from a digital marketing platform to a transactional matchmaker at scale, we are leveraging our best practices and infrastructure for acquiring acquiring highly targeted, high-intent consumer leads, and actioning these leads directly, all within the same efficient, optimized platform. I'm extremely proud of the team's relentless work to drive operational efficiencies and execute on our growth objectives within our legacy marketing business and our scaling vehicle acquisition business. I'll provide more detailed commentary on our transformation strategy and Car Zeus's integration progress after Mike runs through the Q3 financial performance. Mike, over to you.