Cars.com Inc. Common Stock

Good morning, ladies and gentlemen, and welcome to the CARS third quarter 2024 conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. I will now turn the call over to Katherine Shen, Vice President of IR.

Please go ahead. Good morning, everyone, and thank you for joining us. Good morning, everyone, and thank you for joining us. Good morning, everyone, and thank you for joining us. Good morning, everyone, and thank you for joining us.

Welcome to the CARS.com, Inc. Third Quarter 2024 Conference Call. With me this morning are Alex Sutter, CEO, and Sonia James, CFO. Alex will start by discussing the business highlights for my third quarter. Then, Sonia will discuss our financial results in greater detail, along with our outlook. We'll finish the call with Q&A. Before I turn the call over to Alex, I'd like to draw your attention to our forward-looking statements and the description and definition of non-GAAP financial measures, which can be found in our presentation. We will be discussing certain non-GAAP financial measures today, including adjusted EBITDA, adjusted EBITDA margins, adjusted operating expenses, adjusted net income, and free cash flow. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the financial tables included with our earnings press release and in the appendix of our presentation. Any forward-looking statements are subject to risks and uncertainties. For more information, please refer to the risk factors included in our SEC filings, including those in our most recently filed 10-K, which is available on the IR section of our website. We assume no obligation to update any forward-looking statements. Now, I'll turn the call over to Alex.

Thank you, Catherine. We drove solid third quarter results that were powered by product innovation and improved performance across our platform. Revenue grew 3% year over year, our 16th consecutive quarter of growth, setting a new record for Q3 revenue. Product adoption expanded in all of our solutions, and most notably, AccuTrade returned a positive quarter over quarter subscriber growth. OEM revenue grew 17% year-over-year to exceed $17 million, a new three-year high based on broad demand from our partners. We also delivered adjusted EBITDA margin of 28.5% at the top of our guidance range. The product-led growth that we saw in Q3 reinforces our platform strategy, helping dealers streamline their operations to accelerate the automotive retail flywheel. Starting with inventory in the lot, our latest customer data reinforces industry insights that sourcing vehicles via Accutrade delivers higher quality vehicle supply. Acquiring cars from customers is far more profitable than wholesale auctions, and it brings in popular late model used inventory, further generating high consumer engagement across our marketplace, dealer websites, and media solutions. Nowhere is our data advantage more clear than on the cars.com marketplace, where we found that our leads and connections typically influence around 30% of dealer unit sales. In a recent analysis of a sample of franchise dealers, our marketplace stimulated over $3 billion in their gross automotive sales this quarter alone. As we invest to strengthen the attribution between our platform and vehicle sales, our market position will only improve. Our overall product performance helped us maintain healthy monetization in Q3. Average revenue per dealer grew slightly quarter over quarter as we focused on cross-selling our platform to enable dealers to operate with greater efficiency and profitability. We're pleased to be moving past the third-party DMS outage in Q3 that intently muted our dealer growth. And we're off to a positive start in Q4 as we grew marketplace dealers in October. Now, I'd like to unpack our product-led growth and traction from the third quarter, starting with Accutrade. First, Accutrade positions us at the center of dealership operations, helping our customers acquire the right cars at the right price to maximize profitability. Industry data suggests that gross profits can be up four times higher when a transaction involves a trade-in, creating a strong incentive for dealers to source from customers. AccuTrade makes this process simple and seamless by displacing both traditional profit-eroding wholesale auctions and labor-intensive legacy inspection models. We see this change in dealer behavior reflected in AccuTrade appraisal volumes, which rose to 671,000 appraisals in Q3, up a healthy 5% quarter over quarter. Furthermore, these appraisals are converting into real inventory at a faster rate, as dealers acquired, on average, nearly 40% more vehicles per month via Accutrade compared to a year ago. Take Ed Martin Toyota, located in Noblesville, Indiana, who committed to appraising vehicles directly in the service lane using Accutrade. After only 60 days, they acquired and sold dozens of vehicles that delivered, on average, 87% more profit per sale. Accutrade is changing the game. The more dealers appraise cars, the more retail opportunities they'll enjoy. Based on our strong value delivery, Accutrade Connected expanded to approximately 950 dealers in Q3 and returned a quarter-over-quarter growth. Notably, nearly 50% of the new dealers onboarded in Q3 We're affiliated with OEMs who have endorsed Accutrade as an on-program solution. Recall that last quarter we also unveiled an exclusive agreement with Jaguar Land Rover to power dealer websites with the Accutrade web application, which we began enrollment in late Q3. We'll keep prioritizing the strategic playbook of leveraging OEM endorsements to stimulate dealer sales and awareness, and we're in active talks to win more partnerships in 2025. Next, a growing number of dealers adopted our digital website experience and media solutions to showcase their inventory to the right buyers and improve inventory turn time. We powered over 7,650 dealer websites during the third quarter, up nearly 150 customers sequentially, with particularly impressive expansion in Canada. Cars Commerce became the number one franchise dealer website provider in Canada in July as we distanced ourselves from competitors with better product performance, and premium features. For example, a significant upgrade to our core platform infrastructure has resulted in double-digit increases to site speed, ensuring a smoother and more delightful consumer experience. We also deployed new AI translation capability for over 100 languages, specifically engineered for dynamic automotive website content like vehicle descriptions, specs, and features. Within media solutions, our VIN performance media product has almost quadrupled its subscriber base since its Q1 launch, exceeding $3 million in annualized revenue in Q3. Customers using VPN have seen up to double-digit improvements in inventory turn rate compared to non-users. One case study showed that average days listed for older inventory dropped by 28%, driving incremental revenue and reducing flooring costs to benefit dealers bottom line. These compelling results spotlight how our proprietary data and differentiated insights power our customers' marketing to drive profitability and the retail flywheel. The reception of EPM has been very positive, and we see a long runway for media solutions growth in the coming quarters. Turning to the core of our platform, our scaled marketplace continues to lead the industry on consumer awareness, engagement, and trust. We drove organic traffic to 62% of our total traffic mix in Q3, reinforcing our strong position as the number one most recognized automotive marketplace. Our audience quality is unmatched, with around 84% of our visitors on our site intending to buy a vehicle within six months. Naturally, our lead conversion continues to be extremely strong, especially as we put more tools in the hands of consumers. New Car Hub, which reduces the complexity of new car shopping, consistently sees lead conversion that is seven times higher compared to overall traffic. Overall engagement continues to improve with repeat visitation up 4% and leads per visit growing 7% quarter over quarter. On top of these product improvements, when you consider that overall lead conversion from cars.com is already 70% better than search engine traffic, it's clear that our audience is deeply in market and ready to buy. Building on this strong marketplace performance, we are constantly innovating to support consumers throughout their car ownership journey. Continued optimization of our personalization algorithm has increased the number of relevant vehicles shown to consumers to encourage cross-shopping between new and used cars. And we also continue to grow consumer mindshare through in-demand channels like social video, where we've already added 50% more content year-to-date. These investments power our extremely efficient organic audience growth, And we have plans to further leverage our content, data, and insights to deepen our consumer differentiation. Finally, OEM revenue remained an important growth driver in Q3, up a strong 17% year-over-year, reflecting broad demand across our marketplace. We saw a robust sell-through of our products with over half of our OEM partners, raising their spending year-over-year in recognition of our strong audience and value delivery. Q3 set an all-time record for incremental wins and is an encouraging signal of growing sales momentum. With inventory levels projected to rise further in 2025 and 73% of visitors undecided on make and model when they arrive on cars.com, we appreciate the need for a balance of new and used inventory on our marketplace. Based on the strong consumer interest in New Car Hub that I mentioned earlier, we're offering OEMs more opportunities to engage with consumers through customization and integrated editorial content as part of our 2025 roadmap. We'll continue to prioritize product development that ensures we deliver both quality and scale to benefit all marketplace participants and create long-term value for the industry. While I know we're operating in a dynamic environment and will continue monitoring trends that impact dealer and OEM spending, we're encouraged by the positive momentum in our business and our growing pace of product innovation. Regardless of industry cycle, we remain extremely confident in our ability to drive consistent, profitable growth and are focused on executing our platform strategy as we strive to grow product adoption and increase monetization. Now, Sonia will lead the discussion on our third quarter financial results. Sonia.

Thank you, Alex. Our diversified platform strategy and strong operating disciplines produced both year-over-year revenue growth and strong adjusted EBITDA margin in the third quarter. Revenue totaled $180 million, our second-best quarterly revenue of all time, and was up 3% year-over-year. Dealer revenue grew 2% year-over-year to $160 million, driven by contributions from D2C Media and improved adoption of our website and trade and appraisal products, with a slight offset from lower marketplace revenue. As Alex mentioned, we are diligently monitoring dealer spending trends which has been pressured in the near term by profit normalization, and we're optimistic that sustained consumer demand and expectations for an easing rate environment will lessen some of these constraints as we head into the new year. OEM and national revenue was $17 million, up 17% compared to the prior year period, and the highest revenue for this segment in over three years. Our momentum reflects our product investments coupled with ongoing OEM investments into marketing and advertising targeted at raising consumer awareness to capture demand in a rising inventory environment. Turning to our operating expenses, third quarter expenses were $168 million compared to $160 million a year ago, up roughly 5% year over year. Third quarter adjusted operating expenses were $156 million, approximately 4% higher than the same period last year. Products and technology expenditures increased $4 million year-over-year and $3 million year-over-year on an adjusted basis. The increase supported additional headcounts and investment in data infrastructure and back-end systems to support greater product development velocity. Marketing and sales costs decreased $2 million year-over-year on both a reported and adjusted basis, reflecting improved marketing efficiency as well as favorable comps against the year-ago period, which contained costs related to our corporate rebranding initiative. General and administrative expense was up $4 million year-over-year, primarily due to the inclusion of D2C operating costs, including $2.8 million in D2C earn-out expense this quarter. As a reminder, unlike the earnouts associated with our other exhibitions, D2C earnouts were deemed compensation expense under GAAP and therefore run through operating expenses. As a result, on an adjusted basis, general and administrative expenses were up just $1 million year over year. Net income for the third quarter was $19 million, or $0.28 per diluted share, compared to $4 million, or $0.07 per diluted share, a year ago. primarily due to the change in the fair value contingent consideration of prior acquisitions. Meanwhile, adjusted net income for the third quarter was $28 million, or $0.41 per diluted share, compared to $27 million, or $0.40 per diluted share, a year ago. Adjusted EBITDA for the third quarter was $51 million, up 3% year-over-year, and also slightly outpacing revenue growth. We are pleased with our disciplined execution, which yielded a JustiVita margin of 28.5% for the quarter, pushing us to the high end of our guidance range. Now to recap some key metrics. We ended Q3 with 19,255 dealer customers, down 135 dealers quarter over quarter. Our dealer customer count captures some of the challenges we faced when sales momentum was hampered, in July and August as customers recovered from third-party DMS outages, and as continued macro trends put pressure on dealer profitability and budget. However, we're pleased to see market dealer customer growth in October, and we're confident that our diversified growth strategy and focused product execution will help us sustainably expand our customer base in the long term. It was also encouraging to see that third-quarter ARPDs of $2,478 was up slightly quarter over quarter, indicating a healthy level of monetization across marketplace, websites, and appraisal technology. Encouragingly, we increased the penetration rate of higher tier premium and preferred marketplace packages from 68% last year to 75% this year, a sustained structural shift that we attribute to strong customer demand for our services. On a year-over-year basis, ARPD was down $70, largely ascribable to B2C growth, which contributes lower average revenue per dealer due to the more narrow suite of solutions sold in the Canadian market. Now, shifting to our balance sheet. Net cash provided by operating activities totaled $123 million year-to-date. Free cash flow was $104 million year-to-date, roughly $28 million higher year-over-year. Free cash flow performance year-to-date was primarily driven by adjusted EBITDA growth of $15 million and timing related to lower cash taxes and working capital, partially offset by increased CapEx. During the third quarter, we repurchased 1.2 million shares for $21 million and are on pace with our commitment to return approximately 50% of second-half free cash flow to shareholders via share repurchases. Year-to-date, we have repurchased 2 million shares for $36 million, and we have $84 million remaining on our current share repurchase authorization. In addition, we repaid $5 million of debt in the third quarter and reduced total debt outstanding to $470 million as of September 30, 2024. Our total net leverage is now two times, at the low end of our target range of 2 to 2.5 times. Total liquidity of $330 million as of September 30, 2024, ensures that we have ample resources to execute our growth strategy and to pursue sustainable value creation for shareholders. Finally, I'll provide guidance. We're reaffirming our fiscal year 2024 outlook of 4.5% to 5.5% revenue growth based on year-to-date performance and current business trends. For the fourth quarter, we anticipate strong, high single-digit year-over-year growth in OEM and national revenue, with that growth rate reflecting a tougher comparison against last year's best quarter of OEM performance. Dealer revenue is expected to grow modestly year-over-year, with continued product adoption while also lapping the D2C acquisition of November 2023. Adjusted EBITDA margin outlook for fiscal 2024 remains at 28 to 30%, representing adjusted EBITDA growth of approximately 8% year-over-year at the midpoint of the range. We also expect to exit Q4 with adjusted EBITDA margin of approximately 30%, based on continued cost discipline and operational efficiency for the remainder of the year. And with that, I'd like to open the call for Q&A.

Operator?

Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touch-tone phone. Questions will be taken in the order received. If you wish to cancel your request, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question is from Navid Khan from B-Reilly. Your line is now open.

Great. Thank you very much. A couple of questions from me. So it's great to see dealer count return to growth in October. I'm curious if this is driven by new dealer additions in active trade and in D2C or if you're able to also bring back some of the dealers that might have left. over the last several months. So just a little bit of color on that would be helpful. And then just in terms of the, you know, the CDK out there and how it kind of affected, negatively affected the sales cycle and everything, where do you think you are now in terms of recovery from that? Do you think by year end we should be completely over it or do you think it takes a longer turn?

Thank you.

Thank you. Well, first of all, our October growth was strong across the board. We saw growth in marketplace and in all of our product solutions. So we're pleased to see sales momentum returning to the platform. And certainly the DMS impact prolonged longer than we would have liked in terms of rebooting those conversations. But that's why we're pointing to October as being evidence that we're getting through it. I think we've got literally one enterprise client that we're still in discussions with them about remedies for the outage.

But generally, I think sales momentum is back across the platform.

Great.

And then maybe just in terms of the marketing spend, What's the right way to think about this for the Q4 quarter? I see that you kind of dialed it down a little bit. Is that because of seasonality or is it because you adjusted your spending because of how it is? How should we think about this?

We, you know, we're always looking to figure out, to find the best return on investment when it comes to kind of our marketing and sales investments. So when we have the opportunity to dial back, we will. Now, as mentioned, I think in my prepared remarks, we did have, I guess, a slightly favorable comp versus last year in terms of some of our brand spend associated with the corporate rebranding. As you roll forward sequentially into Q4, you know, there's probably a little bit of opportunity for us in terms of sequential growth and marketing spend because we do have some events typically that land in Q3 that you won't see that same cost repeat in Q4.

Got it. Thank you, guys. Thank you. Thank you.

The next question is from Tom White from Davidson. Your line is now open.

Great. Thanks for taking my question. I guess I wanted to just flush out the dynamics in the dealer revenue a bit more. I guess, I mean, what – can you maybe explain sort of what gives you guys the confidence that it, you know, is sort of this hangover from the CDK situation when, you know, there are some peers who seem to be able to kind of grow through it and – You know, if you back out D to C, you know, the kind of the organic growth, I don't know, is maybe flattish, maybe down a little bit, it looks like. Can you just, you know, maybe just talk about, you know, how you're thinking about, you know, elevated churn in dealers potentially? And then I had a follow up. Thanks.

Sure. Well, again, we'll point to October, Tom, in that we had strong dealer growth across all of our products and solutions. And even D2C, respectively, a lot of that growth is selling Accutrade throughout Canada. So we're getting growth across our full product set and our full sales suite. And so we feel generally good about dealer revenue. Historically, both during election seasons and at year end, seasonally, those tend to be softer returns. consumer demand tends to get muted during election years. This may be different just because it was more demonstrative, but typically Q4 is soft in terms of dealer growth, but we're feeling bullish on the growth in all our product lines occurring in October and carrying that through end of year.

Okay. Thanks for that. And then just on the OEM. Yep.

I was just going to add, Tom, I mean, a lot of our confidence in terms of our ability to deliver growth comes from the investments that we've made in our product. I think we see that consistently when we look at the performance of our marketplace, our ability to influence sales. In a sample of our dealers, we found that we influence roughly 30% of their sales, and our conversion rates continue to be superior to what dealers may get through other channels. We redesigned our AccuTrade website, which is driving 50% more leads this quarter versus last year to dealer customers. So we do see ourselves as being really front footed from a product innovation perspective in terms of our ability to deliver on growth as well. So I just wanted to add that in there coupled with what we saw in October.

Okay, thanks. And then just a follow-up on the OEM line. So I think you guys last quarter, you know, three months ago had guided to it being down sequentially and it was, you know, up sequentially nicely. Can you just maybe talk a little bit about how like the quarter transpired on that front? I know that's a notoriously kind of lumpy business, but, you know, just trying to, I guess, understand, you know, the visibility on that kind of going forward. Thanks.

Well, first, I'll comment more broadly that we're pleased with the momentum in this channel. And importantly, that sets up also for 2025. We're in the upfront process for next year. And I would say those conversations are being affirmed based on the point Sonya just made on the product innovation, new car hub. Most of our clients are saying that other endemics don't have product solutions like this. And so there's a heavy lean in by the new car players that want to use our platform to take market share. And so I just think we're feeling very good about the transformation we've led in that business. I'll let Sonja comment a little on Q3. We were able to pick up some of the penalties that we incurred earlier in the year in Q3 from one of the clients who rebooked some of that penalty revenue as media sales. So that was a nice pickup in the quarter. but generally we had strong demand across all of our clients in Q3.

No, I would just, I mean, I think, Tom, you know the business quite well. I think the OEM and national revenue does tend to be a little lumpier. It tends, again, to be oriented around new model launches, special incentives, things like that, which can make it a little bit more difficult to pinpoint. on range, but we're pleased with the Q3 results. And, you know, we had a record set of incremental wins that we hope will bolster us into Q4 and next year.

Great. Thank you, guys. Thank you, Tom. Thank you. Your next question is from .

Your line is now open.

Hi, it's Zach Wall, just from Joe's back today. So thank you for the question. I had two quick ones. One, you know, did the hurricanes impact the business and, you know, Accutrade adoption in the quarter? And then two, just any change in tone from the dealers about like adding services and then higher inventories versus 90 days ago, especially as we head into the seasonal holiday season? Thank you.

Great question. We did see seasonal impact or I should say regional impact to the hurricane impact. And we've seen this movie before where consumer traffic initially comes to a halt as people reckon with the crisis and even dealer inventories are impacted. But they're also followed with like a 30-day lag and we're seeing record traffic rebounds in those regions and much stronger consumer demand than where we were before the impact. So it somewhat nets itself out. And certainly we know it spurs a lot of replacement vehicle sales. As far as interesting product adoption, dealer new car inventory levels are rising. But the one durable trend which we're seeing across the industry take form is dealers recognizing that street buying or sourcing cars from private sellers is far more profitable than battling over aging inventory at wholesale auction. And so regardless of inventory levels, dealers are recognizing that sourcing cars from their customers always brings in more desirable inventory. You're seeing this reported by some of the large publicly traded dealer groups who are signaling this as being one of their key profit driving strategies. And now that's taking root across the dealer community, looking for ways to replicate that success at their local level. And so We've been doing Accutrade luncheons over the past two months, and they've been sellout events across the country where dealers are coming to learn, how can I copy what some of the industry players are doing to source inventory directly? And so I think we're on a very durable trend there.

Thank you.

The next question is from Gary Prestopina from Barrington Research. Your line is now open.

Hey, good morning, all. I kind of jumped on the call a little bit late. Did you, the guys, quantify or talk about any lagging impact of the CDK cyber hit in the quarter for Q3?

Yeah, Gary, the headline there was just –

Our sales pipeline rebooted a little bit slower than we would have liked, but definitely popped in October across all product lines. So we're on the right track. It just took a little bit longer to get people past it and moving forward. And certainly, obviously, the current economic cloud and the dealer community as profit normalization happens also is a little bit harder sales rate where dealers are looking to cut back on technology solutions as opposed to add. But when they see the strength of our solutions, I think they know they're getting enterprise-grade technology. So we're feeling really good about the October growth across the board, all solutions.

I'm just interested in looking at slide 11 with the VPN, the performance media business, which you said the subscribers have quadrupled since Q1. It's very early in the game, but... What are the dealers finding is the real benefit with this product? And maybe if you could, could you slap a number on how many dealers have actually started to subscribe to this, Alex?

I don't have the dealer count numbers, but generally if you understand the product benefit is that we can put more media weight against aging inventory. So dealers, rather than just promoting all their cars with equal weight, We now help the dealers customize where they want additional retargeting waiting on aging inventory. And what that's doing is it's lifting the total turn rate for the dealer's entire inventory. And so, yes, they've got to spend more to sell more, but we're not finding resistance in the price points here, which are analogous to almost a different subscription tier. And so the take rate's been strong out of the gates. And I think that will continue to accumulate heading into next year as I just think we're going to head into higher inventory levels, slightly softer demand. Dealers are going to have to be much more disciplined about moving their entire inventory as opposed to being reliant on a third.

Yeah, and I'll just add in terms of the number of dealers who are using the product, it's still, as you mentioned, in early days, but we have several hundred dealers that are using the product and benefiting from these results.

Okay. And is this priced on dealer size?

How do you price this? It's a flat fee. Flat fee per month? Yes. Okay.

And then just as you talk to your dealer base, your salespeople are out there talking to the dealer base. I mean, was there a feeling like a lot of companies prior to the election, they were saying they were really kind of sitting on their hands and all that. And now that the election is over, I know it's really a day or two over, but is there still, you think, a big appetite for your product lines? out there, given what's going on in the market itself and that it's a real sluggish market?

You know, Gary, we just held a two-day dealer council meeting here in Chicago with probably 25 of the larger dealer groups in the country. And what they shared with us heading into next year is that while they were concerned about the election outcome and not wanting to see a heavily contested election or a prolonged period, which doesn't look like we're going to have, but they generally are going into next year wanting to invest more in technologies to help reduce their overall employee cost and try to compete on running a more efficient business as vehicle sales and gross profit per unit normalizes. So they're really reaffirmed that our cars commerce platform technologies that seamlessly work together is the antidote to what they're trying to solve. And so going into next year, I generally think dealers are going to be looking to spend more in technology and to automate parts of their business and to streamline operations versus less.

Okay. Thank you. Thank you, Gary.

Thank you. The next question is from Marvin from VTIJ.

Your line is now open.

Great. Good morning. Thanks for taking my question. So, I also hopped on a little late to the call. Two questions on AccuTrade. First question, it's great to see the dealer count rebound a positive growth up 50 in the quarter, I believe. Just a level set expectations. I mean, how do you see sort of that cadence of increases going over the next couple of quarters? Should we kind of think about 50 to 100 dealers as quarter over quarter growth is about the right number? And then second, Second question, Alex, I do believe you mentioned earlier that you're in discussions with OEMs about, you know, getting further endorsements for AccuTrade and maybe some co-op dollars. You know, could you just kind of dial or drill down a little bit deeper? You know, I'd love to kind of know, like, you know, what are sort of those discussions like? What is it that OEMs are looking for? before they kind of give the go-ahead for those endorsements. Just love some extra insight there. Thanks.

Sure, Marvin. Well, first of all, we're really pleased with the health of the AccuTrade install base. Not only are our dealers who are using the platform appraising more vehicles, we can actually see through the data that they're also acquiring more cars. And so our first priority is making sure our clients are successful with the technology and the tools, and we're feeling front-footed on that. I think part of our Q3 success was that we did snap through the DMS impact that halted sales earlier in the quarter. And so we did get a little bit of a pickup there. But I do think that's a realistic kind of pacing that we could finish the year on because we're getting a lot of interest and, importantly, industry attention. When publicly traded dealer groups report record profitability, citing vehicle acquisition being entirely done from customers versus auctions, the dealer body takes notice. And so they're trying to replicate what some of the large consolidators are demonstrating in their financial performance, and they're looking to us to enable that outcome. So that's exactly what AccuTrade does. It levels the playing field and gives our back to the long tail of this industry. So I would hope that could be a consistent growth metric that we could achieve most of next year, but we'll see how Q4 finishes out and give guidance for next year at the end of the quarter.

Okay. That's great. Maybe you have a follow-up.

Your second part, yeah, the OEM? Yeah. On the OEM side, look, we're really pleased with the progress. In fact, I think it's almost like 60% of the sales that we generated for Accutrade in the quarter were from the OEM dealers that we've got endorsements with. So it's showing that if we can get the OEM endorsements and the top-down financial support from OEMs to point dealers our direction, it can be a boost for sales. So we are in discussions with more OEMs. I don't think those will close this year, but I think that'll be a 2025 thing that could accelerate our growth next year. But we're in multiple conversations to expand the AccuTrade footprint with OEMs this year.

Got it. Okay, I'll leave it at that. Thanks so much. Appreciate it. Thank you, Mark.

Thank you, Mark. Thank you. There are no further questions at this time. I will now hand the call back to Alex Vedder for the closing remarks.

Well, thank you for joining us today. We appreciate the questions and the interest in CARS Commerce, and we're looking forward to seeing many of you in the coming weeks, both virtually and in person. I just wanted to add and extend this, save a date for our investor breakfast at NADA in New Orleans, which will be at the beginning of next year, January 24th, 2025 in New Orleans. So please save the date. We'll send you more details soon, but it'll be a great way to kick off the year and get a deeper dive look at our product roadmap. This concludes our call. Thank you very much for joining us today.

Thank you, ladies and gentlemen. The conference has now ended. Thank you all for joining. You may all disconnect your lines.