Good morning, everyone, and thank you for joining us. It's my pleasure to welcome you to the Cars.com Inc. Second Quarter 2024 Conference Call. With me this morning are Alex Vetter, CEO; and Sonia Jain, CFO. Alex will start by discussing the business highlights from our second 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'll be discussing certain non-GAAP financial measures today, including adjusted EBITDA, adjusted EBITDA margin, 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.

Thanks, Catherine, and thanks, everyone, for joining us on today's call. We extended our track record of delivering both revenue growth and strong profitability with our second quarter performance. Q2 revenue was up 6% year-over-year, boosting us to record year-to-date revenue in the first half of 2024. OEM and national performance was particularly robust, up 28% year-over-year. Dealer revenue also contributed to growth as we expanded dealer count while maintaining ARPD. On profitability, adjusted EBITDA was solidly within our expectations, up 10% year-over-year from strong operating leverage. And free cash flow grew to $56 million for the first six months of 2024, which was the highest level in 3 years. Q2 was our 15th straight quarter of delivering year-over-year revenue growth, showcasing our ability to execute through challenging external conditions like the industry-wide CDK disruption that occurred in June and continues into the third quarter. Recall, we have a high concentration of franchise dealerships who rely on CDK. With dealership operations interrupted, many of our sales conversations and product launches were paused. I'm proud of our team who creatively stepped up to support dealers whose systems were down both in sending leads to dealers directly and updating inventory manually. While we made strong efforts to support our retail partners, we also lost considerable sales momentum. Our priority in Q3 is to reramp those engagements, particularly for products like Accu-Trade, which require a longer sales cycle and hands-on dealership engagement. This was a frustrating event for the industry and for us, but we believe it's ultimately a temporary impact as we continue to grow the business in 2024 and beyond. More importantly, we delivered on our key growth drivers in the second quarter that advanced our platform strategy and laid a strong foundation for continued growth in the remainder of the year. We're transforming OEM relationships. We grew dealer customers and deepened product differentiation and strengthened our leading consumer marketplace. First, our OEM business accelerated, growing 28% year-over-year from increased demand from both new and existing partners. More than two-thirds of OEM customers increased their year-over-year spending on our products and services during Q2. They recognize we offer the best solutions to connect them to in-market high-intent shoppers, especially as competition for consumer awareness rises in tandem with vehicle supply. Our strong value delivery led to multi-week sellouts for the homepage takeover product and tripling of sponsorship revenue year-over-year, among other positive results. Furthermore, our consumer scale and brand attracted new EV entrants INEOS and Rivian as new customers during Q2. These wins and our past success with Tesla position us well to support EV tech leaders as they aggressively grow market share. And we believe there are still huge opportunities ahead to capture OEM growth for our marketplace and media as well as diversify our partnerships into products like Accu-Trade. More on that in just a minute. We also achieved sequential dealer customer growth despite June sales interruptions from the CDK incident. It's important to note that we also maintained ARPD, which was up modestly year-over-year. Our marketplace had a strong quarter, with May being our best month for new franchise sales in the past year. And we continue to target more dealer customer growth and cross-sell our solutions. While Accu-Trade's subscriber growth in Q2 did not meet our expectations, we have made substantial progress on several initiatives that maintain our confidence for continued growth. Strategic initiatives that are underway helped lift engagement and appraisal volume, which we view as the number one predictor of customer satisfaction and ultimately, retention. For the month of June, new Accu-Trade users who started in April generated on average 31% more appraisals per dealer versus those who started in March due to enhancements in our onboarding process. And in total, dealers generated over 639,000 appraisals for Accu-Trade, with higher average appraisals per dealer in the second quarter. Though it's still early, it's also encouraging to see that our efforts have yielded close to 100% retention for users who enrolled in Accu-Trade in April and May. These trends, plus positive feedback from new customers, are strong signals that our Accu-Trade subscriber base should expand over time. What really underpins our confidence is the fact that Accu-Trade continually outperforms competitors. Our data shows that Accu-Trade appraisals are 34% more accurate than competitors, offering clear economic value for dealers and consumers. Recent third-party research further bolstered the merits of our products. We have also found that our Accu-Trade users are our most engaged customers, with nearly half of them subscribing to three or more Cars commerce product lines to leverage our platform synergies. This combination of high product efficacy and enthusiastic adoption by our largest and most sophisticated users reinforces our competitive edge and provides us with actionable insights on how to drive broader Accu-Trade adoption over time. To that end, I'm pleased to announce that we have won several new OEM endorsements that we believe will be catalysts for future growth. Earlier this week, we announced that Accu-Trade was certified by Stellantis Digital as a trade and appraisal solution for their U.S. retailers. Jaguar Land Rover also selected Accu-Trade as their exclusive trade and appraisal solution for their new digital retail experience on jlr.com and dealer websites. This makes the Accu-Trade trade-in website application automatically available to all JLR dealers starting in September. As a reminder, this is part of our suite of native modern retail applications that offer a seamless omnichannel experience for dealers and consumers. The Accu-Trade trade-in website application drives high-quality leads to dealers and was recently redesigned to increase trade and lead volumes by 50%. We see potential for the trade-in website application, which grew 40% quarter-over-quarter, to be a new and attractive entry point for Accu-Trade adoption. Overall, these endorsements underscore the growing recognition that Accu-Trade is a better model for sourcing vehicles than what is currently available via auctions, disjointed website solutions or opaque trade-in methods. In terms of digital website experiences, we grew to nearly 7,520 customers in the second quarter from strong performance across cars commerce website solutions. In Canada, D2C just became the number one dealer website provider in the country, and that lead extends even further when we include the DI website growth that we've driven since late last year. We are extremely pleased with the team's execution, not only in delivering strong synergies across our platform, but also in leveraging OEM endorsements, which are a key driver in growing our website customer base. And we have line of sight to additional OEM certifications in the back half of the year, which should add to our sales pipeline in Canada. On the product side, we've also rolled out a new DI website redesign that has yielded double-digit gains in consumer traffic, engagement, and conversion for pilot sites. We expect this innovation will continue to drive our website differentiation, customer satisfaction, and subscriber growth. Finally, our industry-leading marketplace continues to scale while winning high consumer engagement. Q2 traffic was up year-over-year, and we maintained our lead on organic traffic at approximately 60% of our total mix. We're reaching the highest intent and most active shoppers who drove repeat visitation roughly 7% higher year-over-year as we exited the quarter. We also continue to invest in unique editorial content like our American Made Index that drives consumer interest and efficiently attracts new shoppers. As a result of continued product and content innovation, leads improved meaningfully over the course of the second quarter, another proof point of improving value delivery for our dealers and OEMs. Summing it up, we grew top line, bottom line, and cash flows, all while staying nimble to better position ourselves for continued growth. We're committed to advancing our platform strategy through vectors like improving product adoption, expanding OEM partnerships, and capturing other enterprise opportunities as we further transform and enable the automotive retail experience. I'll now turn the call over to Sonia to lead the discussion of our second quarter financial results and outlook.

Thank you, Alex. We delivered year-over-year revenue growth and margin expansion in the second quarter through disciplined execution of our platform strategy. Despite being slightly below our expectations, revenue of $179 million was up 6% year-over-year, reaching a new second quarter record. This includes the roughly 1% unexpected impact from discrete items related to legacy solutions contracts. Excluding that impact, revenue would have been roughly in line with the low end of our guidance range. Dealer revenue grew 4% year-over-year to $160 million, driven by contribution from our D2C acquisition and increased adoption of our trade and appraisal and website products. OEM and national revenue was $16 million, up 28% compared to the prior year. This acceleration in growth reflects continuing OEM investments into marketing and advertising to influence and drive consumer awareness of their products amidst rising vehicle inventory levels. For the second quarter, total operating expenses were $169 million, compared to $156 million a year ago. Product and technology expenditure increased $3 million year-over-year as we added talent in support of our product roadmap, up leveled key technical roles, and invested in back-end systems. General and administrative expense was up $5 million year-over-year, mostly due to the inclusion of D2C operating costs, including $2.7 million in D2C earn-out expense this quarter. As a reminder, unlike the earn-outs associated with our other acquisitions, D2C earn-outs redeem compensation expense under GAAP, and therefore, run through operating expenses. Second quarter adjusted operating expenses were $156 million, roughly 6% higher than the same period a year ago. Net income for the second quarter was $11 million or $0.17 per diluted share. Adjusted net income for the second quarter was $26 million or $0.38 per diluted share compared to $23 million or $0.33 per diluted share a year ago. Adjusted EBITDA for the second quarter was $50 million, up $5 million or 10% year-over-year, and adjusted EBITDA margin of 28.2% was in line with our guidance range. Operating leverage increased over 100 basis points year-over-year from a combination of revenue growth and mix as well as disciplined investments in the business. Now on to key metrics. Notwithstanding temporary disruptions to new sales and product launches from the CDK incident in June, we ended Q2 with 19,390 total customers, returning to sequential organic dealer customer growth. And notably, our marketplace customers also grew during the quarter. Our July dealer customer count was impacted by the CDK incident. However, we believe this to be temporary in nature. ARPD of $2,474 for the second quarter was up slightly year-over-year, driven by increased product penetration, partially offset by aforementioned discrete items and higher-than-expected growth from D2C customers, who, on average, contribute lower revenue per dealer. We're pleased to see growing uptake of our marketplace and digital experience products, thanks to our cross-selling efforts. For Accu-Trade, which experienced some churn during the quarter, we're working diligently to drive subscriber growth. On our last call in May, we committed to accelerating the Accu-Trade connected learning curve to more quickly embed the technology into dealer operations. Onboarding and account support changes we made in the first half have yielded meaningfully higher product utilization by new users. While the effects of operational changes require time and investment, we're optimistic that we can keep improving dealer satisfaction and retention. And the multiplier effect of our platform is real. We can see that in Accu-Trade data. Accu-Trade customers are far more likely to use multiple cars commerce products, with average revenue per dealer that's more than double that of non-Accu-Trade customers. This data illustrates the power of cross-selling and the importance of growing the Accu-Trade base as part of our platform strategy. Now shifting to our balance sheet. Net cash provided by operating activities totaled $69 million year-to-date. Free cash flow was $56 million year-to-date, roughly $11 million higher year-over-year. Free cash flow was driven primarily by improved adjusted EBITDA and lower cash taxes, partially offset by higher cash interest and increased CapEx. During the second quarter, we made $20 million in earn-out payments primarily related to Accu-Trade. We also repurchased 300,000 shares for $4.9 million, bringing first half repurchases to $14 million. In addition, we have paid $5 million of debt and reduced total debt outstanding to $475 million as of June 30, 2024. Our total net leverage is now 2.1 times, down from 2.3 times last year and comfortably within our target range of 2 times to 2.5 times. With total liquidity of $304 million as of June 30, 2024, we have ample resources to execute our growth strategy and pursue the best return on capital. With $105 million remaining on our current share repurchase authorization and conviction around our growth strategy, we now intend to return approximately 50% of second half free cash flow to shareholders via share repurchases. Our strong free cash flow conversion enables us to deploy our capital in a manner that drives incremental shareholder value, whether through share buybacks, attractive acquisitions, or debt repayment. I'll now conclude with our guidance. In the third quarter of 2024, we expect to deliver revenue in the range of $178 million to $181 million or year-over-year growth of 2% to 4%. Guidance reflects growth in dealer revenue from increasing product adoption, including D2C. OEM and national revenue is also expected to grow year-over-year, but down slightly sequentially when compared to strong performance in the second quarter. Embedded in our guidance is also the impact of the CDK cyber incident, which widely disrupted our industry, our customers, and our business in June and July. Not only was our sales momentum at the end of June severely curtailed, but this continued into July and has a accruing effect on third quarter revenue given the subscription nature of our business. We expect approximately 1% to 2% of CDK-related revenue impact to our business in the third quarter from a combination of lost sales and product launch delays. In addition, we expect to deliver third quarter adjusted EBITDA margin between 26.5% and 28.5% compared to 28.4% a year ago. This guidance reflects continued investments to support our growth initiatives and also takes into account our revenue outlook for the third quarter. In light of our year-to-date performance and considering current business trends, we now expect fiscal year 2024 revenue growth of 4.5% to 5.5%. This range reflects positive product growth and contribution from our D2C acquisition. Our revised assumptions also include a slower rate of adoption for Accu-Trade and lost and delayed sales due to the CDK disruption, which have a compounding effect on full-year subscription revenue. Finally, we are reaffirming our outlook for full-year adjusted EBITDA margin between 28% to 30%. At the midpoint, this represents adjusted EBITDA growth of approximately 8% year-over-year. We are committed to driving cost discipline and operational efficiencies. And even with lower revenue growth expectations, we believe there is sufficient leverage in our model to improve adjusted EBITDA and deliver margin expansion. And with that, I'd like to open the call for Q&A.

Great. Thank you. A couple of things from me. One, maybe Sonia, for you. I think you mentioned 1% unexpected impact from legacy solutions contract? Can you just maybe explain that more a little bit in terms of how that kind of flows through and how it affected you? And the other question I have is on Accu-Trade. So, you did talk about improved satisfaction with the product feature rollout. If I just look at the count, count went down sequentially and you kind of expect slower growth now because of, I guess, some lost sales. Maybe just go through the dynamics of like what might have led to the higher churn? And what has changed going forward?

Thanks for your questions. I think your first one was on the discrete items that impacted us in Q2. That was really related to some legacy contracts associated with our website business. We can't get into the individual customer specifics, but we do believe they were onetime in nature, and it was just a timing issue. They impacted the top line.

Yes. And on the Accu-Trade front, certainly, I'm disappointed in our Q2 results there because we made a lot of positive changes with the product. In fact, our most avid users swear by the product and love it. Getting dealer adoption to change their operational process has proved to be more difficult. And when there's turnover of dealerships, we lose that advocacy inside the stores. There is a shift that we're making on the product, which we signaled on the call, which is to follow our proven DI formula of seeking these OEM endorsements to land and expand accounts through that model. It means we're going to get in at a lower price point, so you may not see the same revenue lift that we were anticipating this year selling the fully connected Accu-Trade product. But we do think we can get solid dealer growth on website solutions and then upsell to move to the full store solution over time. That's going to prolong the ramp here and move it more into 2025, but we still see solid product growth in the solution this year. It's just slower than I think we all would have liked.

Understood. And Sonia, just going back to the legacy solutions contract. So, you quantified it for second quarter. Is it fair to assume there is an impact from the remainder of the year as well you just thought of the guidance today? Or is that something separate from that? Can you just maybe parse it out for me?

The discrete items are really range bound into the second quarter. They obviously influence our full-year results, but the impact is really confined to the second quarter.

I know this question was asked, Alex. But with Accu-Trade, could you go over what was happening besides the impact of the CDK disruption, which definitely affected your product uptake? Was it a matter of the dealers not having the manpower to implement the product, or did they lack the incentive to do so? I'm trying to understand what occurred in the quarter and what changes you've made.

Yes. First, I want to link those two points because while the CDK impact was unfortunate for our partners, it also affected our sales pipeline indirectly. Most of our success with Accu-Trade this year has been with dealer groups, meaning a significant portion of our sales pipeline relied on those groups to further implement the solution across all their locations. However, those CDK dealers have paused their sales activities. We had major deals with dealer groups that we believed would close this quarter, but they were delayed indefinitely. We hope to restart discussions in the third quarter, assuming dealership operations normalize, which they seem to be. We feel optimistic about that. However, as of now, we do not have any verbal commitments from them to proceed with expanding Accu-Trade deployment throughout their platforms. I want to connect these issues. As we've indicated in previous calls, we've been highly focused on dealer success and onboarding, and we achieved significant wins this quarter. For instance, the dealers we've sold to in the past three periods are utilizing the product 30% more than the original group we sold in the first quarter. We're improving in onboarding, targeting, and dealer utilization. These factors will positively impact the product, but it's evident we're going to take a slower approach, ensuring we get it right and build loyalty within the dealer community so that they advocate for the solution and promote it across their stores. The pace has slowed compared to our expectations at the start of the year; we anticipated a quicker scale. That hasn't materialized as we hoped. Nevertheless, the fundamental value of the proposition is strong, and the excitement among dealers using the solution remains very high.

So, you ended up with about 1,000 dealer customers on Accu-Trade in Q1. Is it safe to assume that that number did increase a little bit in Q2? I mean, was there any deconversions?

It didn't grow in Q2. And that's the disappointment that we thought we would see better growth in that. Again, a lot of the deals that we had in our sales pipeline for Q2 were CDK dealers. And so those went from like 90% likely to zero in our sales forecasting, waiting virtually overnight. And then that really put a damper on Q3 momentum, which obviously impacts the full year.

You have shifted your strategy to pursue OEM endorsements, and it's encouraging to see that you have secured endorsements from Stellantis and Jaguar Land Rover. Are these OEMs providing dealers with financial support to encourage them to adopt Accu-Trade?

So, a couple of things, Gary. First of all, I wouldn't say we're totally changing the strategy because our Accu-Trade sales are still solid, and we're still getting dealers to adopt the full solution. I would classify this as saying we're showing agility with the strategy to pursue growth in new ways. And so, the website solutions are something that we signaled last year that all OEMs are realizing that they need trade-in solutions to facilitate new car sales. If you can't get a consumer out of their existing vehicle, it's hard to sell them a new car. And so, all OEMs started talking to us about using Accu-Trade technology not only on their Tier 1 website to talk to consumers directly, but deploying it across their dealer websites. And so yes, we got a couple of huge wins that we shifted to in the quarter to land some OEM endorsements that do include co-op for the platform. And in some cases, they're paying for the dealer to have this widget on their website. The JLR deal, we are the exclusive trade-in provider for all JLR websites. And so, we're going to begin that rollout in Q3, where we'll be replacing any legacy trade-in technology on dealer websites and inserting Accu-Trade. We know that through that experience, the dealers are going to be impressed with what they see in the product. And we think that will open up upsell conversations to deploy the full Accu-Trade technology in their physical stores and off our marketplace as well.

Okay. And just one more question on that with the certification. You mentioned Jaguar Land Rover, you're going to be rolling that out. The dealers aren't required to take Accu-Trade. Again, it's up to the individual dealers to decide. But the OEM can be very cohesive in that regard. Is that right, the correct assumption?

I'll let JLR have to speak to how hard they're going to enforce it, but they've announced this as the exclusive technology that they want to see deployed across all JLR websites, whether we built them or not. And so, we are providing this technology that will be private labeled on the dealer website. JLR is beginning their rollout to their dealer network, and they're looking to create a consistent digital retail experience, which we are going to power not only for the corporate website but again, exclusively across all JLR websites. So, we do think it will produce meaningful upsell opportunities. It certainly will mean lower revenue initially, but like we showed with dealer website adoption when we landed these OEM endorsements, it led to faster overall sales growth for not just websites but for media and for marketplace to those dealers because of the OEM backing.

Okay. And then, so just one more question I'll go up. Is it fairly safe to assume that if we didn't have this issue with CDK, there would have been no step down in the revenue guidance for the back half of the year?

It's a good question, Gary. I mean, as Alex indicated, Accu-Trade was a little softer than we expected it to be in Q2. We're really pleased with the OEM endorsement in that land and expand strategy that we're going to run with our website application to connected. And we're also pleased with the promotions we put into the market to drive dealer engagement. They just take time. So that was certainly an additional component factored into the guide in addition to the disruption from CDK.

Good morning. Thank you for addressing my question. I have an inquiry about the guidance for the second half of the year. I appreciate the details provided about the third quarter, especially regarding the effects of CDK and Accu-Trade. However, when I review the implied guidance for the fourth quarter, it suggests about 3% revenue growth at the midpoint, which appears to be slower than the third quarter when excluding the CDK impact. I'm curious about the reasons behind this deceleration. Why aren't there any offsets from other areas of the core business? Is it mainly driven by Accu-Trade? Additionally, how much was Accu-Trade expected to contribute in your initial 2024 guidance from earlier this year? If you could connect those two points, that would be helpful. I have a quick follow-up.

Thanks for the questions, Rajat. I am not 100% sure I'm getting to quite the same map as you are for slowing growth in Q4. We do expect to see some strong trajectory as we move through the balance of the second half. From some of our comments earlier, as you've probably gathered, we had strong aspirations for the Accu-Trade ramp-up over the course of this year. Last year, we were largely devoted to pricing and packaging efforts on our marketplace. And so, there's been some challenges. CDK certainly interrupted some of the efforts we had put in place in Q2 to try to drive dealer engagement. And that is a reason for the revision in part to our guidance range.

Understood. Okay. That's fair. We can check offline on the fourth quarter calculations. Regarding the buyback in the second half, my calculations suggest there could be around $30 million to $40 million available for share repurchases in the second half. Is that approximately correct based on the assumptions we should consider?

That is in the ballpark. We agree on that math.

Yes, I have been monitoring some public reports released this week and analyzing the various developments from different companies. I believe we provide high-level advantages that our competitors lack. Most of our traffic comes to us organically or directly, so when customers choose to work with us, they experience genuine improvements in their sales performance. In contrast, many of our competitors depend on search engines and marketing arbitrage, which compete directly with dealers' other marketing budgets. Additionally, on the technology side, I believe we have no real competitors, as our website solutions are exceptional, both in the U.S. and Canada, where we've achieved the top position. Our Accu-Trade technology, although growing more slowly than we hope, continues to contribute positively to our growth and the overall effectiveness of our platform, leading to a solid impact on our bottom line. As more dealers adopt our technology, it adds significant layers of Average Revenue Per Dealer, painting a favorable profit picture for the business that will generate substantial free cash flow. Therefore, I think we are in an excellent position, with strong growth in both revenue and EBITDA this year in the second half. Although it may be slightly lower than we desire, the fundamentals are robust, and we are maintaining our execution.

But just to clarify, do you have visibility on the number of actual transactions occurring with Accu-Trade? Should we consider appraisals as a good indicator of that? Also, you received two significant endorsements this quarter from Stellantis and Jaguar. What is the pipeline looking like for more endorsements? A few quarters ago, you had four direct ones. Is there ongoing activity with other major nameplates? I also have a follow-up question.

Great question, Marvin. First, we are observing vehicle acquisitions at dealerships, as we can see which cars are appraised and then see them in dealer inventory on our marketplace. We are starting to integrate that technology, and so far this year, we've noticed dealerships acquiring an average of 17 cars in June, a slight decrease from 18 in May. If you consider the auction fees for 17 or 18 cars, dealers typically spend $2,000 to $3,000 per vehicle at auction. However, with Accu-Trade, our software solutions enable them to acquire 17 or 18 cars for the same amount. We understand that the difference between sourcing inventory from customers versus physical auctions is a macro trend we can rely on. This method is proving successful, and dealerships that are implementing it are reporting record profits. We are confident that we are focusing on the right macro approach regarding the traditional wholesale model compared to the new retail methods. The second part of your question pertains to OEM endorsements. As seen in our social media posts about the Stellantis deal, there has been significant dealer engagement and excitement about car companies finally supporting dealer digital offerings. Historically, OEMs have pressured dealerships to upgrade their physical showrooms. I believe we will see more capital investment from OEMs aimed at helping dealers enhance their digital capabilities, and we have established the necessary infrastructure to support both Tier 1 and Tier 3 dealers more effectively than our competitors.

I would like to discuss the second quarter numbers regarding dealer count and ARPD. Did the CDK impact those figures? You mentioned a loss of sales momentum at the end of the quarter and an increase in churn for Accu-Trade. It seems that ARPD was lower than my expectations. Could you clarify how much of this was attributable to CDK, how much was due to other factors, and how much came from the Accu-Trade shortfall? It appears the second quarter results were below the low end of your revenue guidance, so any insights on these developments would be appreciated.

Yes, I'll start and then maybe Sonia can provide some additional information. We were very pleased to see an increase in dealer count during the quarter. While we would have liked the increase to be larger, we noticed a positive shift in the fundamental trend with higher new sales. We shared on the call that we have strong traffic trends, and our lead and value delivery are also improving. We're happy with the dealer count growth this quarter. However, it's worth noting that we expected to see more sales from Accu-Trade in Q2 and hoped for more momentum by now in Q3. We've discussed this enough that I won’t go into detail, but the sales lift would have positively impacted ARPD growth. Looking forward, D2C has a lower price point than what we typically sell domestically, so even with continued dealer growth, it may slightly depress ARPD. Our strategy to offer dealer website solutions also starts at a lower price point. Although ARPD may not grow as quickly, it remains strong and is steadily increasing. If we can achieve both dealer growth and ARPD growth, it will create a robust financial outlook. Sonia, do you have anything else to add in terms of details?

Yes. To provide a bit more detail, one of the factors affecting ARPD in Q2 is the specific item I mentioned earlier. These are included in ARPD because they are part of our dealer revenue number, and we're aiming for consistency in how we use these metrics. This is likely the primary reason why ARPD was slightly lower than your projection.

So just to be clear, in your guidance, when you provided it a couple of months ago, the discrete items were not contemplated?

Those were not contemplated. No, those were not expected.

Nor were they expected in the full year?

Nor were they expected in the full year. The other thing I'll mention too, which may be helpful, while the CDK disruption certainly had an impact on our business for Q2, in particular, it was less of a financial impact. You see it more in the operating metrics of the business given the disruption to the sales cycle. So, it interferes with like your Q2 exit rate going into Q3. But the financial impact is going to be weighted to the following quarter. So that's why we've been talking about it in the context of Q3 full year guidance, if that's helpful.

A couple, if I could. I guess just first on the national OEM line. Sonia, maybe you could just parse out a little bit for us kind of how the different cohorts of advertisers in there performed? I guess, I'm sort of grouping it maybe like legacy kind of auto OEMs, non-auto national advertisers, and then maybe some new auto OEMs like the EV guys. Just curious like how sort of spend is trending for those groups? And can you confirm, did you say that the line will be down quarter-over-quarter in the third quarter? And then I got a follow-up for Alex.

I'll just start on the mix. Most of our growth with OEMs, Tom, have come through the smaller upstart and/or mid-tier OEMs. We still have the largest OEMs have largely sat on the sidelines. The reason we're not baking those into our second half guide is that hunting those giants is hard to predict, right? If one of those giants were to step back in, it would change the game for us profoundly, but we just don't feel confident baking that into our full year guide. So, a lot of our OEM success year-to-date and as we look ahead is coming from more of the disruptive EV players trying to take market share and more of your foreign and import automakers who are also trying to grow market share in the U.S. We don't have much growth from the large domestic OEMs that have the biggest budgets yet.

And then really specifically to your question on sequential growth in OEM from Q2 to Q3. We do expect it to be down slightly, but I wouldn't consider it to be like a hugely material downtick. It's still growing year-over-year. It's going to be somewhat consistent with what you saw us delivering kind of the Q1 timeframe.

Okay. That's helpful. I just want to clarify, Alex, when you refer to the website solutions. It seems that for various reasons, some dealers are having difficulty changing how they manage trade-ins at their stores, possibly due to turnover or other challenges. Instead of selling a handheld unit that connects to diagnostics, it looks like you're focusing on integrating technology into dealership websites to value trade-ins. This approach is intended to attract customers and, over time, you hope to expand to more on-premise technology.

Yes, let me explain it this way to connect the dots. Our most successful Accu-Trade dealerships use Accu-Trade in their physical stores. They appraise every vehicle that comes in for service, offering this as a quick service for customers. As a result, they are acquiring hundreds of cars per month from their service lane. They are enthusiastic about the product, and there's potential to increase pricing because of that enthusiasm. However, the challenge is that it takes considerable time for dealerships to adopt this physical change, as we need to deploy people and resources for on-premise training. Consequently, the sales ramp is slower, requiring more time and incurring higher costs in our go-to-market strategy. We're finding that manufacturers and dealers prefer to start with online solutions to begin using our technology, and then transition towards a full physical store rollout. I wouldn’t suggest this approach if our only option was to persuade dealers to sell Accu-Trade on their websites. However, with manufacturers organizing regional meetings with their dealer networks and announcing financial support for more effective operations, we believe this can significantly enhance our sales efforts because they are bringing dealers to us. Our focus then shifts to installing the technology and training them on using it on their websites. Those who succeed with this will likely want to increase their volume, ask about sourcing from the Cars.com marketplace, promote the "we'll buy any car" media, and learn how to source cars in their service lane. We think this will lead to a better strategy for sales prospecting. It may result in slower revenue initially, but we believe it will expand our customer base using our technology and tools significantly.

Great. Thanks for the description.

Thanks, good morning. Regarding the CDK outage, this is mainly a temporary effect due to slow adoption. I want to confirm that you're not noticing any cancellations or reconsideration related to lower near-term profits. From what I understand, CDK primarily offers DMS and back-office financing, but they also have other products, including digital retail trade valuation. I'm curious if there is any overlap there and if this situation might present an opportunity due to some potential dissatisfaction with that vendor.

So, the first part of your question, we do believe this has been more of a onetime impact. In a subscription model like ours, when you lose 30 or 60 selling days of new customer acquisition, it can have a prolonged impact on the cumulative effect of your subscription revenue number, which is I think what you see in our full year second half guide. So, the impact is onetime, but again, the subscription nature has a more prolonged impact. If you will, I think you're right that this has been a real challenge, not just on CDK's DMS, but their digital retail solutions, CRM, and their inventory management. And so, we do think there's opportunities for us to pick up market share, where our cloud-based technology, we know we can provide a degree of enterprise-level support and dealerships are looking to find more modern tools and technology that run their stores. So, I do think it has more upside potential on a go-forward basis, but the onetime impact certainly muted some of our success in Q2 and Q3 as well.

Yes, thank you for the question. One of the great strengths of our business is that we generate significant free cash flow. Even after using 50% of our free cash flow in the second half for share repurchases, we still believe we have enough flexibility to pursue other aspects of our capital allocation strategy. Specifically, with debt paydown, we recognize that in today's interest rate environment, reducing debt is generally beneficial. Additionally, we have the leeway for mergers and acquisitions. Therefore, I don’t see this as a limitation. We have been balanced, and we think it’s wise to increase our share repurchase activity this quarter.

Thank you. I want to thank everyone for tuning in today, and I hope that people realize that as we've demonstrated time and time again, including this quarter, we're growing consistently our revenue and our profitability, which is a real winning combination for long-term value creation. We've got a lot of powerful opportunities, and our team is head down executing on our platform strategy, growing the revenue and focusing on innovation. So, we want to thank you for your time today, and we look forward to talking to more of you again shortly.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.