CDK Global, Inc.

Thank you for standing by, and welcome to the CDK Global Inc. Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 1 on your telephone. As a reminder, today's program may be recorded. And now I'd like to introduce your host for today's program, Taz Rowe, Treasurer. Please go ahead, sir.

Thank you, and good afternoon. I'd like to welcome you to our fourth quarter fiscal 2021 earnings call. Joining me on today's call, our CEO, Brian Krzanich, Chief Operating Officer, Joe Taugis, and our CFO, Eric Guerin. Following their prepared remarks, we will 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 includes an updated Excel schedule of supplemental financial information and a copy of our results presentation that we'll be referencing during our prepared remarks today. Throughout today's call, we'll be discussing our continuing operations only, which do not include the international business results, which are presented as discontinued operations. Unless otherwise noted, all references to financial amounts on the call on a non-GAAP adjusted basis Reconciliations of the adjusted amounts to the most directly comparable GAAP amount are included in this afternoon's press release. Please note that all growth percentages refer to the year-over-year change for the period unless otherwise specified. I would like to remind everyone the remarks during the call may contain forward-looking statements. These statements involve risks and uncertainties as further detailed in our filings with the SEC, which could cause actual results to materially differ from those mentioned in the forward-looking statements. With that, it's my pleasure to turn the call over to Brian. Thank you, Taz.

And thanks to everyone for joining us today. Let me start by saying how pleased I am with the financial results we achieved in fiscal 2021. We closed out the year strong, with fourth quarter revenue of $420 million, up 12% from 2020. And EBITDA in the period was $161 million, and EPS was 66 cents. And these results met our expectations and, along with the positive trends in our underlying business metrics, show that we continue to strengthen our position with our dealer and OEM customers, which in turn sets the stage for accelerating growth. 2021 was a pivotal year for CDK. And despite the challenges of the ongoing COVID pandemic, we continued the strategic transformation of the company with the sale of our international business. Combined with the digital marketing divestiture in late 2020, this transition leaves the company laser focused on our core North American software markets, supporting our auto and adjacency customers. And the CDK international sale also significantly strengthened our balance sheet, allowing us to reduce debt and fund the highly strategic acquisition of Roadster in the fourth quarter. We recorded auto site growth for the 10th straight quarter, with sites up more than 1% in auto and 3% in our adjacency markets. Revenue per site was again a record for both markets, rebounding strongly from the impact of the discounts we offered in Q4 2020 to support dealers at the height of the pandemic shutdowns. but also showing solid growth versus last quarter. Fueling this growth is our ongoing determination to wake up every day and help our customers sell more vehicles, service more vehicles, and run their businesses more efficiently, and ultimately drive the transformation of the entire automotive retail industry. CDK has the unique opportunity to improve today's fractured industry. offering partnerships built on years of understanding. We are at the heart of the ecosystem, connecting our industry at every level, and investing heavily in our vision to lead the industry into the future. We are connecting dealerships to consumers with the recent acquisition of Roadster. Over the coming months, we will complete the integration of Roadster's front end into CDK's existing platform, including the eLEAD CRM. And we're connecting employees across departments within the dealership by providing a suite of solutions that work together seamlessly, allowing them access to the best in-class solutions like Roadster and ELEADS, regardless of their DMS. And we're leveraging integrations built on our Fortelis platform to extend our capabilities. And Fortelis continued to gain traction over the years. with more than 155 million transactions and far exceeding our goal of 100 million. We're connecting OEMs and dealers with continued advancement in our DMS solution, while our DMS sales for the year set an all-time record. Most significantly, we are connecting the industry with intelligence, enabling the transformation of data into intelligent actions And a great example of this is the new predictive service application that is in preview as part of our CDK service solution. And dealers need to increase revenues but lack the ability to get the right intelligence from their data. And with this predictive service, a technician will easily be able to recommend the right repairs at the right time, benefiting the consumer and increasing dealer profitability. In 2022, we will continue to invest for our customers. Though some of the heavy lifting is now behind us and our investments are already generating benefits, including better customer satisfaction, a growing customer base, and stronger financial results. As a result, I'm pleased that our earnings guidance for the coming year reflect accelerating growth in both the top and bottom line. And Eric will provide more details in just a few minutes. We've included some data from our systems in our earnings presentation, which indicates the themes and trends of 2021 largely continued into the fourth quarter. OEMs continue to face production constraints due to supply chain issues, which are resulting in tighter dealer inventory. Despite supply issues, demand remains fairly strong. And auto sales and pricing have continued to be solid for both the new and used cars. As a result, dealers have been successful in maintaining profitability. And we continue to see our dealers interested in investing those profits into consolidation, which is a tailwind for CDK, given our strong position as a strategic partner to larger, more acquisitive dealers. And we expect consolidation will remain a theme that benefits us into 2022. Consolidation, along with strong sales and installation efforts, helped us continue our strong site count growth. We continue to see strong growth in our most strategic applications like CRM and service. And we are excited to be rolling out One Pay and Roadster to the CDK sales force as we enter 2022. These products show that we continue to help dealers modernize and improve their operations. The automotive retail landscape is evolving faster than ever, and CDK is at the forefront of investing in its future. We're creating the customer experience models others will follow in developing powerful platforms that lead the field. And as the industry moves forward, we're confident that it will be on the infrastructure we continue to build. Now, before I pass over to Joe, I'd just like to thank all of our stakeholders, our employees, our customers, and our partners for their support and efforts this year. Despite starting the year with significant uncertainty driven by the global pandemic and associated economic challenges, We work together to develop and implement solutions for these challenges and continue to deliver innovation and technology improvements to support the industry. And I couldn't be prouder of what we achieved in 2021. And I really look forward to a promising 2022. So now I'll turn it over to Joe for the business highlights.