CDK Global, Inc.

Good day and thank you for standing by. Welcome to the Q3 2021 CDK Global Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Julie Schleter, Director of Investor Relations. Please go ahead.

Thank you, and good afternoon. I'd like to welcome you to our third quarter fiscal 21 earnings call. Joining me on today's call are CEO Brian Krasanich, Chief Operating Officer Joe Tauches, and our CFO Eric Guerin. Following their prepared remarks, we'll be taking questions. Our earnings press release was issued after the close of the market today. and is posted on our investor relations website at investors.cdkglobal.com, where this call is being simultaneously webcast. In addition, our website also includes an updated Excel schedule of supplemental financial information and a copy of our results presentation that we will be referencing during our prepared remarks. Throughout today's call, we will be discussing our continuing operations only, which do not include the international business, which is presented as discontinued operations. Unless otherwise noted, all references to financial amounts during our call are on a non-GAAP adjusted basis. Reconciliations of adjusted amounts to the most directly comparable GAAP amounts are included in this afternoon's press release. Please also note that all growth percentages to the year-over-year change for that period, unless otherwise specified. I would like to remind everyone that remarks made during this call may contain forward-looking statements. These statements involve risks and uncertainties, as further detailed in our filing with the SEC, which could cause the actual results to differ materially from those mentioned in the forward-looking statements. With that, it is my pleasure to turn the call over to Brian.

Thank you, Julie, and welcome, everybody. I'd like to start today by saying that I'm very pleased with the execution and performance of the organization during our fiscal third quarter. The revenue for the quarter was $433 million, up $7 million year over year. And the bidder for the quarter was $166 million, at a margin of 38.4% and an EPS of 69 cents. And these results matched our forecast and reflect the successful addition of new customers, as well as existing customers rewarding us with more of their business. Now, looking at some of the trends within the industry, we continue to see heightened consolidation activity in the retail automotive market, where the larger dealers are continuing to get bigger, and that plays to our strength. Well, we expect this tailwind to continue into 2022, led by some of our top customers, who have announced record expansion plans. And dealers are facing tight inventory levels for new retail vehicles due to reduced production caused by part of a chip shortage. But they are working through these and, as a result, are seeing a lot more activity in used vehicle sales, with both sales and prices of used vehicles up in the quarter. The overall sales activity can be seen on slide four of our results presentation. which shows the recent quarter had the highest average sales over the five-quarter period. Execution for the quarter was strong, and many of the important indicators of the health of our company and customers' confidence in our future direction were positive. In particular, we saw significant site growth, exceeding 9,000 auto sites for the first time since 2017, and the largest quarterly increase since 2016. The site growth was up 94 sites for auto, nine straight quarters of year-over-year growth, and up 137 in adjacencies. Equally as important, revenue per site reached all-time highs for both auto and adjacencies, up 2% and 4% respectively. And this is based on the strength of our DMS and core solutions, like service and CRM. And as we continue to grow each quarter, we expect to achieve more record highs. As you're aware, we successfully closed the $1.45 billion sale of our international business during the third quarter. And I'm pleased with the recognition of the value we received, which equated to a 15 times multiple. The finance team has done a great job at putting the proceeds of the sale to work for our shareholders. We've taken our debt down by $1.1 billion and have lowered our leverage ratio and interest expenses. We are reserving some of the cash for potential investment opportunities, which could include acquisitions or other strategic activities. We plan on returning capital to our shareholders in the form of stock purchases. And Eric will provide more details about this in his remarks. We believe this balanced approach will provide our shareholders with continued value well into the future. And with a view of the future, I'd like to announce that we plan to host an investor event sometime after our fiscal year-end results, where we can go into detail about our growth plans and investment strategy. But I'd like to touch on a few important initiatives here today. As you know, our transformation journey started two years ago as we launched a dramatic, more customer-focused approach to our service and support. At the same time, We directed our investment efforts on modernizing our products and underlying technology with a focus on building a modern platform for integrations via Fortelis and a platform for managing and providing insights from the wealth of data across our industry. Together with our customer-focused approach, our unique combination of domain expertise, our market leadership, workflow enablement through Fortelis and data insights from our Neuron platform distinguish us in the industry. Our three-year strategic investment program is on track, and we're now starting to see the results of these efforts in the growth of the business. We've made significant progress in modernizing our software and expect to continue rollouts of our more customer-focused enhancements in 2022, such as new user interfaces, enhanced workflows, and the use of data-driven insights to deliver truly differentiated value. Our Fortelis Automotive Commerce Exchange platform had over 27 million transactions during the quarter and is on track to reach our goal of over 100 million transactions per full year. Next year, we're setting our expectations at significant multiples of this level. And as more developers and independent software vendors embrace Fortelis, we anticipate a compounding network effect through this connected community. We've seen the pace of innovation from our neuron platform further increase as a result of our square root acquisition during the quarter. The integration of the company is going well, and we're already seeing benefits of the larger team of data scientists. But beyond our current investments, we're always studying and anticipating the longer-term trends impacting our industry. And as a market leader, we have both a responsibility and an opportunity to help guide dealers and OEMs through all the industry shifts that are occurring and provide the tools they need. I'm especially excited about the evolution of the car buying experience and the trends toward modern digital retailing. Dealers are realizing that their true competitive advantage lies in providing a meaningful customer experience, one that is personalized, easy, and cohesive across all channels, and interactions. We see this trend extending to all touch points a dealer has with their customers, from marketing and sales to service and repair. We believe we are uniquely positioned to connect all of the pieces together. With our industry-leading DMS and CRM, along with our digital retailing solutions and enhancements to products like CDK Service, we have the building blocks to win big in this market. We have ambitious plans for the rest of the fiscal year and through 2022. We continue to invest in our products, our platforms, and people to support our customers. We're excited about the trends in the industry and our ability to capture more of this attractive market. While no one can predict when the world will completely return to normal, we see upside opportunities for our customers and for our business. We're cautiously optimistic in our outlook for next quarter, and Eric will provide more details on our full-year guidance. And before turning it over to Joe, I'd like to personally thank the employees of CDK for their dedication and flexibility through this year. Their high level of performance and successful management of our business has never been more important, and I'm truly grateful for all their hard work, commitment, and enthusiasm. So now I'll turn it over to Joe for the business highlights.