Welcome back. I'm Brad Erickson. I cover internet, obviously, at RBC. I've said that about 12 times in the last 24 hours. Very pleased today to have the management team from Cars.com here, CEO Alex Vetter, CFO Sonia Jain. Thanks very much for being here.
Thank you.
Thank you.
Appreciate it. So obviously, like with all these sessions, we encourage questions, so feel free to raise your hand, and we can certainly elevate them. But I have a litany I will go through, so I'm sure we'll get to a lot of stuff in the time. So Alex or Sonia, either/or, just to kind of palate cleanse here post-lunch, maybe start us off with just a quick recap of the quarter. And particularly, what are the kind of one or two or three questions you're getting from investors-
Mm-hmm
... as you have your post-print conversations?
Yeah, I mean, I think it was a solid print in the last quarter, I think largely driven by a couple factors. One, our revenue accelerating through our dealer solutions strategy, and also a bounce in OEM revenue. I think you've been reading about, you know, rising inventory levels by automakers. There are a lot more cars on the ground than there historically have been, and so for the first time in a number of years, the OEMs are starting to have to get back into the game, which is a really high flow-through revenue channel for us.
Yeah.
But I think underlying of our strong print was, like, we're a very durable, sticky, recurring revenue stream-
Yeah
... in what's otherwise a pretty volatile market.
Yeah.
I don't know, Sonia, what else you'd add to that?
I'd probably just add one more thing, which is, at the beginning of this year, in March actually, we started our marketplace repackaging initiative, basically revisiting the structure of our marketplace packages, as well as raising rates. And that concluded in Q3, pleased with how those results translated through into numbers, which was a 9% improvement-
Yeah
... in our ARPD year-over-year.
Yep. Yep, got it. So let's start off with a market question. Obviously, you mentioned some improvements. You mentioned the OEM improvements particularly. How do you guys play, and what are the—I guess, how are you indexing towards those industry improvements? Do you think you'd, you know, do a little bit better than the market if we see some stabilization in line, and why? I guess maybe just talk about that.
Well, maybe I'd pan out a little bit and say one of the reasons we're at events like this is that we think we have to educate a lot of our investor community. Because the strength of Cars.com, it's like this amazing brand that generates 60% of our traffic organically. We don't have to arbitrage traffic nearly to the degree that other players do, but it's really our underlying solutions portfolio that's generating, you know, durable growth, that's generating a lot of free cash flow.
Yeah.
That business is insulated from these changes in inventory, supply, and demand.
Yeah.
I mean, a dealer's not gonna turn off their website, because they sold one fewer car this month.
Yeah.
Advertising and marketing, we know they dial those up and down, but our solution strategy, you know, is very resilient to these macro trends.
Yeah.
I think the business has really been absent OEM revenues, you know, growing for the last five years.
Yeah.
So all our growth, which is accelerating, both in pricing, to Sonia's point, and just the overall dealer revenue has been growing at a very healthy clip.
Yeah
... and accelerating.
Yeah.
If that OEM were to come back-
Yeah
... in a meaningful way next year.
Yeah
... you've got a really strong, SaaS-like business that's generating a lot of cash.
Yeah, and maybe talk about... Yeah, 'cause obviously that's been very lumpy, like you said, for a number of years. Talk about the durability of that recovery, right? And maybe what are the indicators we look for? Certainly the strike ending and things of that nature seem helpful, but-
Well, between COVID going into supply chain crisis-
Yeah
... I can't predict what's next in the algorithm.
Yeah, yeah.
But again, the business-
Something, something volatile, for sure.
Yeah, something will come at us. But, like, we're a vertical SaaS company, right?
Yeah.
We're building software for the auto industry, and increasingly, that software is how they're running their day-to-day operations.
Yeah.
So again, very difficult to just turn off-
Mm-hmm
... our AccuTrade solution, right? Dealers are appraising hundreds of vehicles every month on their physical store using our technology and mapping that to our retail marketplace.
Yeah.
And so we're embedding technologies that are being used by the industry, you know, on a day in and day out basis to run the store.
Maybe if I can add on a little bit on the OEM side. You know, historically, we've talked about growth in that business being driven by, on some level, inventory levels. 'Cause those translate into incentives, special events, that they'll obviously want to promote, and then also to new model launches. So one of the things that's so interesting about what's happening right now, inventory levels obviously starting to rise again as new production increases, and also the launch of more and more EV models, some with traditional OEMs.
Mm
... some with new, new OEMs that have no brand name recognition. And then there's a whole consumer education aspect around those vehicles.
Yeah.
So we see that as something that's actually gonna be a real benefit to us. A little bit lumpy in terms of predicting exactly when the revenue's gonna hit.
Mm-hmm
... but a long-term growth driver for our business.
Yeah, yeah.
That was one of the case studies we highlighted on our earnings call with a traditional OEM advertising an EV vehicle on our site. Not just seeing an uplift in terms of activity generated from the marketplace itself, but it also translated to the dealer website, so OEM dollars connecting Tier 1 to Tier 3-
Yeah
... is a big part of our value prop.
Got it. Okay, and Sonia, or for you, Alex, you mentioned the repackaging. Can you just walk us through what was involved with that? What were the mechanics of that?
I mean, we hadn't taken rate in, since we took the company public in 2017.
Mm-hmm.
And so we knew that our traffic levels have continued to climb. We've outpaced all the competitive set in terms of our value delivery-
Yeah
... 'cause our traffic levels are substantially higher than they were when we took the company public in 2017. And in addition, we've acquired some new enabling technologies that also enhance the value of the platform-
Yeah
... in addition to the volume. So we structured our marketplace offerings in sort of a good, better, best format, and what's great is that dealers saw a lot of value in the upper tiers, so they were buying more of the premium-tier programs-
Got it
... to get that differentiated value and quality.
Yeah.
And so, you know, it doesn't mean that we're done with pricing actions. We think we can continue to take rate and grow our, our volume as well, but it, it really did take the lion's share of our sales force this year. Dealer count went down-
Yeah
... this year, but we went into this year saying, "That's probably gonna happen because we're taking up pricing double digits.
Yeah. Yeah.
And so we view it as a big success, and then we know dealers eventually start to come back.
Yeah
... because they feel the loss of value.
Yeah. Uh-
I don't know, what else would you add on, on it?
I think the other thing to add is, you know, we introduced our financing options, Instant Finance, into these packages, so expanding the platform value.
Yeah.
It gives us a nice structure as we've done other acquisitions, AccuTrade being one that we completed recently, to think about a framework in which to slot and expand a dealer's access to the platform.
Yeah, yeah
... in an easy go-to-market way.
Yeah. And just to be clear, you're... When you think about the price increase, is that how you kind of positioned it with your customers as attributable to those things or was it more just a higher value on the core?
A little bit of both.
A little bit of both.
A little both.
Yeah.
Okay.
Yeah.
And along those lines, one thing, you know, we've covered some of the names in the space for a long time, is attribution, right? It's always a hot-button issue. And it's funny, we've talked to dealers before who the CFO acts like they don't even know how to read a spreadsheet because it behooves them to understand or agree with your reporting. And then there are others that are all over it, right? And they make work with, you know, vAuto or Dealertrack or whatever, some of these inventory management systems. How do you guys... How do you think your reporting and your attribution matches up to the competitors as you walk in and talk to these dealers and talk about renewals?
Well, you know, anytime you deal with small to medium-sized businesses who don't have digital as their day job, right?
Yeah.
There's gonna be some challenges in terms of that educational gap.
Yeah.
What we remind customers is that this is the category where the majority of work is done online and the purchase is made offline.
Yeah
... and that dealer systems today are tracking, at best, 5%-10% of the true value-
Yeah
... of our marketplace. What we see very empirically through our Dealer Inspire website portfolios, over 6,300-6,500 dealer websites today-
Mm-hmm
... we outperform all of their, all of our competitive set by a factor of, like, 3-4 times-
Yeah
... in, as measured through Google Analytics.
Yeah.
We can see how much time they spend on the marketplace, and then do they convert to the dealer site?
Yeah.
Most of our competitors play lead arbitrage-
Yeah
... and ship the same lead out to dozens of dealers.
Yep.
We've never gone down that rabbit hole. We tend to run a level playing field. We promote their stores in our marketplace and are comfortable with people leaving our marketplace, going to the retail as the next step, because that's the purchase journey. And so increasingly, Google is now making their analytics portfolio easier for medium and small businesses to use.
Yep.
I'm walking into mom-and-pop stores who've got Google Analytics on their screen, and they can clearly see-
Yeah
... that Cars.com is the number one driver of traffic to their website, in addition to, like, traditional lead gen-
Yeah
... phone call metrics.
Yeah.
I think our sales force, I know our sales force feels very front-footed.
Mm-hmm.
That's an educational challenge in any distributed category, but we feel really good about our value.
Yeah. That's interesting. So you're talking about the transition from Universal to, I think it's called GA4-
GA4
... or whatever. One of the other, I guess, topics of discussion in your industry is, you know, and this is a theme in prepaid advertising in general in the internet, right, is getting paid for your relative value, right? You're delivering way more value than probably you're getting paid. How do you think about closing that loop, given some of these new tools?
Well, some of the loops are gonna get closed for us, right?
Yeah.
Like, so with the cookie deprecation coming and restricting the use of cookie data for targeting-
Mm-hmm
... you know, the auto industry spends billions of dollars in that form of marketing. And as the cookie, you know, gets shut down, manufacturers and dealers are gonna have to buy first-party audiences. So-
Yeah
... so some of those things are gonna happen that are gonna be big tailwinds for us. Again, 60% of our traffic is coming to us organically-
Yep
... directly. And so if you wanna access that audience, you can't buy it through Experian or Equifax or some of these other, like, inferred intent.
Yeah.
And also, just like, reaching people when they're in the act of shopping.
Mm
... is basically what CPG learned-
Yeah
... in retail media. That rather than trying to force people to come down your marketing funnel, optimize for where shoppers exist today.
Yeah.
It's why, it's why Apple, despite having great retail locations, sells iPhones on Amazon.
Yeah.
People know Apple.
Yeah.
It's something... You know, but they're in Amazon, and it, it's easier to order.
Yeah.
So, I think there's some macro trends that are gonna be great tailwinds for us.
Mm-hmm.
I don't know, Sonia, what else you'd add to that in terms of trackability or assignability?
I think some of the investments we've made on the solutions side of the business really help bolster our ability to drive and talk about attribution on the marketplace side of the business. So Alex spoke to the fact that we power over 6,000 dealer websites today. So we have, like, a bird's-eye view into how they're driving traffic to their site, we know we're number one there, and then how that traffic then also converts.
Yeah.
Similarly, with Instant Finance and with instant offers, you know, we're sending a consumer into the store who is more engaged, more ready to buy because they have a sense of what the value of their vehicle is worth. And by the way, when they put in an Instant Offer, that goes out to dealers, so they clearly know what the source of that lead is. So our strategy of building out a platform wasn't just about building a collection of point solutions; it was about putting them together-
Yep
... and we see that connectivity when we talk about-
Yeah
... marketplace attribution.
Got it. Okay. Talk about the solutions business, that's pretty interesting, obviously. How has that business grown in terms of dealer penetration, and what, you know, are you talk about why you win, I guess, with those customers.
Maybe I'll take AccuTrade and you take Instant Finance or something like... I mean, like, I'm very passionate about where we are with AccuTrade because I think it changes the industry structure.
Mm-hmm.
I'm sure everybody here has had to sell a car before. You go to the dealer, you get a number, you have no idea if that's a relevant value. With AccuTrade, you know, we have the dealer plug in an actual device-
Mm.
we send the vehicle's actual intrinsic diagnostic to us in the cloud, we calculate in real time both wholesale and forward-looking retail value.
Mm-hmm
... and deliver a much more accurate value in minutes. Legacy dealers will take your car and inspect it for 45 minutes, burning man hours, time, filling a service bay, and you've got no real guarantee if the customer's gonna take the offer.
Yeah.
So we're really improving the customer experience-
Mm
... not only for the user-
Yeah
... but also for the dealer, because now they can do hundreds of appraisals, you know, during the course of a day, where historically, they'd average, you know, 5-6.
Yeah.
Particularly with consolidation in the dealership community, they're looking for singular plays that they can run at scale-
Yeah
... and repeat across a network of stores.
Yeah.
If you look at our book of business, like our websites, we power most of the top 100 dealer groups' fleet.
Yeah, yeah.
So when they acquire a store, they wanna add that store, get it off that local agency that built it in that market-
Yeah
... to the Dealer Inspire platform.
I think the trajectory, you know, Dealer Inspire is a nice analog to how we think about potential growth with the solutions we've acquired, like AccuTrade. When we bought Dealer Inspire, they were, call it 1,000-ish websites, over 6,000 today, and that's the kind of trajectory we would expect to see with something like-
Correct
... AccuTrade-
Yeah
... if not higher-
Yeah
... because dealers can use more than one vehicle-
Yeah
... valuation-
Yeah
... tool.
Absolutely. Yeah, and on, I guess on AccuTrade, right, like, there have been others that have tried to create sort of their own standardized inspections or what have you, and certainly from a pricing standpoint, I guess, speak to the moat that you think you have with AccuTrade?
Well, I think a lot of the industry arrives at vehicle valuation using failure rate data.
Mm.
When I say failure rate data, it's like auction data, meaning cars that retailers couldn't sell, so they auction them, and then another dealer tries to buy that car in hopes that they'll be lucky.
Yeah.
We're using retail demand data from the Cars.com marketplace that's giving forward-looking consumer intent.
Yeah
... so we can put a prediction on how long it will take for this car to sell at the retail level, which is ultimately a success metric-
Yep
... not a failure metric.
Yeah.
We are changing the way the industry operates.
Mm-hmm.
It's been stuck in this legacy model for too long. Technology will be an unlock-
Yeah
... and we're leading the way.
Got it. And maybe let's go there, product, product roadmap-wise, add-on products, it's, like, being able to attach to the core or the solutions. What, what are... Maybe just talk to us about how robust that roadmap looks like?
It's increasingly. You'll see in our financials our product and technology investment continues, both inorganically and organically.
Mm.
I mean, just as an example, we launched My Garage, so that users now can register your vehicles on the Cars marketplace-
Yeah
... we push your vehicle's value to you, not only what it's worth today, but a forward-looking value of your car, and then if dealers wanna try to intercept you to buy the car, they can send you offers.
Yeah.
Very much we're copying a Zillow's estimate playbook, but it doesn't exist in auto, and we were first to market there.
Yeah.
I think when you look at the other things we're doing in terms of commerce media, we rebranded the company's go-to-market operations, Cars Commerce-
Mm
... because we wanna get OEMs to compete in retail sales.
Yeah.
Today, if you look on your iPhones, you can search for a Tesla now on Cars.com and actually see a new Tesla and go through our experience to order the car from Tesla.
Yeah.
I think the new car side of this business is untapped.
Mm-hmm.
A lot of our innovation has been on the used car market-
Yeah
... and what we've done there successfully.
Yep.
We're now applying some of those same plays to the new car market.
Hmm.
And so, like, the New Car Hub on our site, you can see all the new makes and models with user ratings-
Yeah
... and reviews in real time.
Yeah.
An area of continued focus and-
Interesting. Most, I mean, most of the sites, right, are still heavy on the used car side, and I think a lot of it has to do just with, you know, you reduced information asymmetry, right through the internet era, and gross profit dollars on new cars in particular fell off a... I don't wanna say fell off a cliff, but they fell a lot more than used cars, certainly. So why can, why can this be different, I guess, from a, from a new car perspective, right? Whereas... 'Cause it feels like you guys are sort of re-
Well, I think we're the only one that-
... reinvigorating the market there
... I think we're the only one-
Yeah
... to connect Tier 1 efforts to Tier 3 outcomes.
Mm.
This is one of those markets where there's been a lot written about, like OEMs wanna go direct to consumer, and-
Yeah
... we won't get into what a sinkhole that would be.
Yeah.
because the retail system is pretty efficient.
Yeah
... in this market.
Yeah, yeah.
You know, geographically dispersed, you know, access to expertise, to test drive-
Mm, yeah
... and trade in. Very durable TAMS in terms of the way the market is structured today, but there's nobody that can really connect, Ford does this action with Cars.com and drives Ford dealer outcomes across-
Mm
... a network of dealer sites, and-
Yeah
... we're the only player that can connect those two things.
Yeah.
I think that is a pretty differentiated capability.
Yeah. Just came to mind, random question: How do you think about some of the OEMs trying to think about marketplaces in the future? What's, what's your take on-
Well, they've largely not played ball. They've put all their money in Facebook, Google-
Mm
... and weird retargeting things that are saying, "Because you own a car, you're a car buyer.
Yeah.
You know, 86% of our audience intends to buy a car within a six-month window.
Mm.
That's different than they own a car, therefore, they're a buyer.
Yeah.
In fact, 50% of our audience intends to buy within 30 days.
Yeah.
... So the OEMs, I think, have to restructure their businesses, particularly coming out of this UAW-
Yeah
strike. The domestic ones have gotta figure out a more efficient way to sell their cars.
Mm-hmm.
It ain't building a retail network that already exists.
Yeah.
It's about finding marketing efficiency, finding a faster path to market, and optimizing for actual car buyers-
Yeah
... as opposed to the spray and pray marketing strategies that they enjoy.
Every time I hear that, I laugh. I like that one.
More Super Bowl ads last year for car companies. I bet you couldn't even tell me the makes or models, but you saw about nine, at an average of about $4.5 million a pop.
Yeah. Yeah.
For 30 seconds.
Yeah.
The market's gotta change and optimize differently.
Yeah, for sure. Just in terms of, you mentioned 60% of the traffic is direct. Obviously, tremendously, a powerful URL you guys were fortunate to get your hands on. From a growth perspective, do you guys care more about... I know, I know you care about both, but how focused are you on traffic and maybe investing in that side of the business? It's a tough business. You mentioned arbitraging that stuff out. How focused are you? How much... And how much does that matter to the growth story?
We believe, like, we have a really healthy audience and the most engaged audience out there. Obviously, we would love to continue to capture more of that audience share, but it's been... It's important, 'cause it also fuels some of our solutions, like I was talking about, Instant Finance and Instant Offer.
Yeah.
But I think also, at the end of the day, what's most important is the quality of the audience. Dealers don't want leads going to them that aren't ready-
Yeah
... to buy or are in a confused stage.
Mm-hmm
... of their purchase decision. So our focus is really two-pronged, and that engagement piece is really important. 'Cause if we don't deliver there, then their ability and desire to work the leads goes down.
Yeah. Yeah, and maybe a margin question follow-up on that. Just how do you think about the sales and marketing leverage in the model as you prioritize some of the things you just talked about with customer or user acquisition?
So, we generally believe we have the right, even though we've expanded the number of products we are selling, especially with our platform strategy and the repackaging, we do believe we have the sales team we need-
Yeah
... to accomplish our growth goals. You know, marketing's an interesting one. We've always been hyper-efficient there, and we continue-
Yeah
... to find ways to do that, and I think you'll see us do that. We invest in editorial as an example-
Yeah
... because that helps us drive really healthy SEO traffic. It also helps with the quality of the audience that we're then handing, handing to dealers.
Yeah. Got it. And then on the sales force front, bringing new dealers on, just as we look at the P&L right now, how... Maybe characterize the aggressiveness in terms of trying to bring on new dealers.
Um-
Well, today, I mean, you know, domestically, we've only got 19,000 dealers in a TAM that we size at about 40,000.
Yeah.
A lot of our competitors would say there's more dealers, but-
Yeah
... we tend to ignore the very small, long tail-
Sure
... 15-20-
Yeah
... used car lots.
Yep
... and focus more on a healthier TAM. So there's 40,000 dealers in the U.S., we have 19, and that doesn't mean we have sell-through of all those solutions-
Sure
... across that 19.
Yeah.
We've got 'em with one. And so there is a heavy degree of focus on cross-selling and growing. Our last quarter, we announced a small Canadian acquisition that gives us a geographic footprint for Canada. That business only has 1,000 dealers today, and Canada has roughly 10,000-
Yeah
... viable targets there. In both geographies, we've got material upside, but importantly, the margin profile really gets enhanced when we can cross-sell even two solutions-
Yeah
... right?
Yeah, yeah, yeah.
Because most of the operating cost is, the backbone's been built.
Yep. Yep.
And so we've got margin expansion through cross-sell, and there's certainly room for dealer growth.
Got it. And maybe speak to attach rates in some of your successful situations on some of those value adds you-
Well, I think, like, Dealer Inspire is a good example, to your point.
Yeah.
6,500 dealers-
Yeah
... in a relatively short period of time. AccuTrade, we're in the first inning.
Yeah.
We're already up close to 1,000 dealers there, just under 1,000 dealers there.
Yeah.
Things like Instant Finance, you know, are more bundled into our marketplace offering.
Mm-hmm. Yeah.
You know, we haven't yet to launch our dealer-to-dealer trading solution, but that is a next vector of our-
Yeah
... AccuTrade business, where we can start to collect, you know, an exchange fee for every dealer-to-dealer trade.
Yep, yeah.
So we've got additional levers that we've got plans for, but right now it's really about improving the cross-sell and growing dealer count-
Yeah
... even if it's modest.
Yeah. Yeah, so you bring up a good point, and, you know, common theme, and again, prepaid advertising, not just the used car market, but, you know, there's a, there's a limit sometimes to how much you can charge somebody for the value of the leads you're delivering, but there's obviously more value as you go down the funnel. You guys are starting to do that, have started to do that. Maybe talk about that effort, how it's going, what you've learned thus far.
Well, look, I, I know that we know that dealers spend the majority of their budgets on Google, and it doesn't really convert incremental sales-
Yeah
... to the dealer's system.
Yeah.
In fact, we had one dealer that ran a Google test and showed that 85% of his Google traffic were people calling about a car that's in the store for service.
Yeah.
We've all used Google as a phone book lookup, right? And so we see there's opportunities to educate dealers on not only the upper funnel platforms they use and how they don't convert, but more how to optimize that lower funnel marketing mix.
Yeah.
And again, to Sonia's point, the technologies that we've added in our solution portfolio, we're not just sending them a lead. It's like we're sending you this lead that's been pre-approved by Capital One.
Yeah.
So the attribution rate on those dual benefits of you're not only getting an incremental sale, but you-... yeah, attach financing to it-
Yeah
... I think eventually makes the platform essential, because there isn't another form of media, at least that we can see through dealer KPIs, that's generating a higher level of sales return on a lower cost.
Yeah. Yeah. And on the dealer-to-dealer you mentioned, what are kind of the main product challenges you foresee as you look to roll that out at some-
Well, a lot of our competitors just run sort of virtual call centers-
Yeah
... trying to get dealers to, like, be matchmaker. And takes tons of people-
Yeah
... cost and time-
Yeah
... and not a lot of guarantees.
Yeah.
With AccuTrade, if you can get dealers to use consistent methodologies-
Yeah
... they can agree on a trade, right? Because with AccuTrade, we're taking an actual vehicle diagnostic. So another AccuTrade dealer, like, we assure the values of those cars, and therefore we know we can enable-
Yeah
... risk-free trading-
Yeah
... to the degree that there's risk-free trading in auto-
Yeah
... because we can assure the dealers that they're both using the same, you know, validated technology-
Yeah
... to arrive at a consistent and fair value. So phase one is to build up the dealer network.
Mm-hmm.
Phase two is to enable dealer-to-dealer trading.
Yeah. And then I guess last question, and I have a couple lightning round questions for you at the end. Maybe one for Sonia. Just, you know, as investors get to know you guys and the story better, how should... How do you want investors to think about sort of your normalized growth rate, growth profile, and then also on margins, kind of longer term?
Yeah. No, I mean, we certainly aspire to be a double-digit grower from a top-line perspective. We believe we have the portfolio of products to enable that through ARPD growth and/or through dealer customer growth. Likely both.
Yeah.
And then, from a margin perspective, we do think there's a lot of leverage in the business, to your earlier question on sales and marketing, right?
Yeah.
The incremental flow-through of revenue on our platform is extremely high. So we talked this, on this last earnings call, about getting to 30% margins in Q4. You know, ultimately, the goal is to deliver sustainable margins well above that.
Yep. Yeah, got it. So with the last couple minutes, I'm gonna, I'm gonna put my channel check hat on just a little bit. So again, lightning round, though. 10, 10, 12, we'll call it try to 13 words or less answers.
Yeah.
So a huge theme, you guys are obviously big cloud customers. A huge theme in cloud over the last year is finding savings. Rationalizing, optimizing, are kind of the buzzwords that were used. So if we assume that was kind of the state of the market in 2023, as you guys think about your business, and I'm not—this isn't, like, a margin guidance question, so, you know, take your CEO and CFO hats off for a second. This is, you look out into 2024, do you see... Do you think companies like yourselves will identify more opportunities to optimize more cloud cost out of the business? Or do you think this was more of, 2023 was maybe more of like a, call it a catch-up year for some excess spend, and we're back to kind of normal in 2024? What would you say?
Well, on the cloud cost, I don't know if I have a comment on that, but we absolutely see a path for increased efficiency just through AI.
Okay.
I mean, we're automating so many things that were once human-led with, you know, consistent, repeatable, scalable technology.
Yeah.
So without a doubt, we see a path for that. Importantly, like, even the company we bought in Canada is a really high margin profile business, and they didn't have any other products to sell.
Yeah.
So now that we're unlocking them-
Yeah
... with increased sell-through of a bigger portfolio of solutions on top of an already strong margin business.
Yeah
... we see leverage. In fact, our strategy largely was copying AWS, right?
Yeah.
Amazon existed, Cars.com existed. They enabled businesses to run on their cloud. We're enabling dealers to run their websites on the Cars.com cloud.
Yeah.
So the parallels here are many, and you'll find that we think we can generate enormous free cash flow-
Mm-hmm
... by deploying multiple solutions in the same vertical field.
Got it. And so, perfect, Gen AI, most interesting use case that not enough people are talking about? Could be a Cars.com use case, could be something else you guys just find intriguing.
Well, I think the work we're doing on pricing now, right? So, so we don't just give a vehicle value. We're scanning multiple marketplaces to provide a much more accurate index.
Mm-hmm.
and so that's a lot of that's using AI to basically scan multiple marketplaces to give both the buyer and the seller assurances that they're not gonna be able to go somewhere else and get a better deal.
Yeah
... on the margin.
Yeah.
And I'd say that's one. Number two, we build a lot of content for dealers.
Yeah.
They're having us build content for their websites, and frankly, we can, we can use AI to help replace that human workforce with a, with a more automated.
Yeah.
So those are our big ones.
Yeah
... I would say.
Then last one, we're kind of out of time. Hardest decision you guys have to make over the next three years?
I don't know if there's a hard one. I mean, I think scaling any business is hard, day in and day out, but I think we're proven operators-
Yeah
... that have done it for a while and see faster lines of growth. I don't see a hard decision, other than staying disciplined on the rocks that we know will create a lot of value, and keep pushing those rocks, as opposed to getting distracted on a bunch of shiny objects.
Got it. All right.
Fair.
Cars.com management team, thank you, guys, so much.
We'll stick around if anybody has any other questions.
Yeah, yeah.
Happy to stick around.
Yeah. Thank you.
Thank you.
That was great.
Thank you.