1. ALICIA HAYRE & NATHAN LI
February 1st, 2015
Autobytel Inc
2. Business Overview
Key Financials
Autobytel Inc. operates as a digital automotive marketing services company in the
United States.
Stock Performance
Company Overview
Autobytel is an automotive marketing services company that assists automotive retail
dealers and manufacturers market and sell new and used vehicles to consumers
Ticker NASD:ABTL
IPO Date March 26, 1999
Market Cap. $88.0M
Revenue LTM $100.9M
Price $9.75
3. Business Overview
Advertising
Lead Fees
Other
Company Description
Headquartered in Irvine, California – Founded by Pete Ellis in 1995
New Vehicle Lead Program, Used Vehicle Lead Program, Finance Lead Program
Dealer marketing products and services, and consumer-facing websites
Supplementary Products & Services Revenue Breakdown
Consumer Autobytel Dealer
4. Investment Thesis
Strong competitive advantages and healthy financial position
Growth through acquisitions and service expansion
Overreaction from revision of AutoUSA acquisition
Undervalued from valuations
5. Internal Analysis
25%
21%
12%
5%
13%
7%
Lead Conversion Competitive Advantages
Internally Generated High-Quality Leads
Search Engine Optimization/Marketing
Partnering with other websites
Exclusive Systems/Relationships
Technology patents
SaleMove technology
Wide range of services
Mobile
Web
Email
6. Internal Analysis
Revenue growth at CAGR of 11% over past 4 years
Gross Margin consistently ~40%
EBITDA from -$8.8M to $4.0M over past 4 years
ROA ~50%
ROE ~78%
ROI ~63%
Debt to Capital of 21%
Current Ratio of 2.0x
$35M tax benefit
7. Internal Analysis
Recent Management Changes
New Senior Vice President, Chief Financial Officer: Kimberly Boren
Kimberly has been with Autobytel since 2007 and has received a series of promotions
Current Management
President & CEO: Jeffrey Coats
President & CEO since 2008
Board Member since 1996
Has held executive positions at five other companies
M.B.A in International Management
Recently purchased 16,000 shares at $10-11
8. Internal Analysis
Strategic Acquisitons & Investments
2010 - Received MyGarage
technology – provides free
mechanic advice, diagnostic
tools, and access to ratings &
reviews of service facilities
2013 - Received 8,000
preferred shares, as well as the
Autoweb.com domain and two
registered trademarks.
2013 - Received exclusivity
rights to be the only provider of
SaleMove’s patented online-
shopping technology in the
automotive industry.
2013 - Received customer
contracts, technology license
and domain rights, and short
codes used for SMS texting.
2014 - Received 1400 new net
dealers, scale, and better inventory.
2010 – Major source of new
purchase requests & search
engine optimization techniques
10. External Analysis
JD Power estimates 1% growth for 2015 domestic light vehicle retail sales
Dealers will look for high return-on-spending
Increased mobile and Internet usage
Drive further demand for Autobytel’s services from dealers
Small scale compared to industry and with greater use of its limited assets
Spends significantly lower percentage of revenue on marketing/advertising
Sales & Marketing Expense Analysis (Fiscal 2013)
($ in millions)
EV Revenue
Sales & Marketing
Expense
Sales & Marketing Expense
% of RevenueCompany
TrueCar $1,477 $134 $75 56%
Autobytel $80 $78 $10 13%
11. External Analysis - TrueCar
Closest public competitor
Displays recent purchases
$113M cash on hand
High cost for dealers
$300/new sold
$400/used sold
Aggressive top-line at the
cost of bottom-line
-60
-40
-20
0
20
40
60
80
100
120
140
2009 2010 2011 2012 2013
Revenue and EBITDA Growth ($M)
TRUE Revenue
TRUE EBITDA
ABTL Revenue
ABTL EBITDA
12. External Analysis - TrueCar
Weighted Average Conversion Rate Calculation
Internal Leads to Total Leads 69.0%
Conversion Rate 21.0%
14.5%
External Leads to Total Leads 31.0%
Conversion Rate 12.0%
3.7%
WACR 18.2%
$400
$367
$300
$275
$220
$122
$88
Effective Cost per Sale
18. Risks & Catalysts
Key Risks
Catalysts
Questionable Management Decisions
Executive compensation
Tax Benefit Preservation Plan
Expansion/Growth
Scale disadvantage
Internet industry risks
NADA workshops, mobile training
Constant M&A activity and implementation
$1.2 M in stock repurchase outstanding
Liolios Group to lead investor relations
Sale exploration: Ancora Advisors