About AutoWeb

AutoWeb, Inc. operates as an automotive industry marketing and used vehicle acquisition and resale company. The company focuses on being a matchmaker by matching consumers seeking to acquire vehicles and vehicle sellers that can best meet those consumers’ needs. The company assists consumers in multiple aspects of a vehicle transaction, including providing valuable content and information to assist consumers in making informed decisions regarding their next vehicle to acquire. The company also assists consumers who would like to sell their current vehicle through its CarZeus vehicle acquisition business, which provides an additional product line extension to its digital marketing offerings. The company primarily generates revenue by assisting automotive retail dealers (Dealers) and automotive manufacturers (Manufacturers or OEMs) in marketing and selling new and used vehicles to consumers through the company’s online lead and traffic referral programs, dealer marketing products and services, and online advertising. The company also offers automotive consumers an option to sell their used vehicle outside of a dealership location. The company resells these vehicles indirectly to Dealers through wholesale auctions or through direct to Dealer sales. The company’s consumer-facing automotive websites (Company Websites) provide consumers with information and tools to aid them with their automotive purchase decisions, the ability to sell their used vehicle without going to a Dealer, and the convenience of submitting inquiries directly to Dealers requesting that the Dealers contact the consumers regarding purchasing or leasing vehicles (Leads). Leads are internally-generated from the company Websites (Internally Generated Leads) or acquired from third parties (Non-Internally Generated Leads) that generate Leads from their websites (Non-company Websites). The company’s click traffic referral program provides consumers who are shopping for vehicles online with targeted offers based on make, model and geographic location. As these consumers conduct online research on the company Websites or on the site of one of its network of automotive publishers, they are presented with relevant offers on a timely basis, and upon the consumer clicking on the displayed advertisement, are sent to the appropriate website location of one of its Dealer, Manufacturer, or other advertising customers. Products and Services The company sells Internally Generated Leads and Non-Internally Generated Leads directly to Dealers and indirectly to Dealers through a wholesale market consisting of Manufacturers and other third parties in the automotive Lead distribution industry. The click traffic program sends consumers to Dealer, Manufacturer, or other advertising customer websites when the consumer clicks on advertisements on the company Websites, as well as on websites operated by third parties contracted with the company as publishers under the click traffic program. The company also offers Dealers and Manufacturers other products and services, including WebLeads+ and Payment Pro, to assist in capturing online, in-market customers and in selling more vehicles by improving the conversion of Leads to sale transactions. In addition, as previously discussed, beginning August 1, 2021, the company also acquires used vehicles from consumers and re-sell those vehicles to Dealers, primarily indirectly through third party wholesale auctions and through direct to Dealer sales. Lead Programs The company provides Dealers and Manufacturers with opportunities to efficiently market their vehicles to potential buyers. Dealers and Manufacturers participate in the company’s Lead, display advertising and direct marketing programs, reaching consumers who are in the market to acquire a vehicle. For consumers, the company provides, at no cost, an easy way to obtain valuable information and research material to assist them in the vehicle shopping process. Consumer Leads are acquired through the company Websites or from third parties through their websites. For consumers using the company Websites, it provides research information, including vehicle specifications, trade in values, safety and pricing data, photos, videos, regional rebates and incentives, and additional tools, such as comparison and configuration tools, to assist them in the buying process. The company also provides additional content on the company Websites, including a database of articles, consumer and professional reviews, and other analyses. New Vehicle Leads Program: The company’s new vehicle Leads program allows consumers to submit requests for pricing and availability of specific new vehicle makes and models. A Lead provides a Dealer with information regarding the make and model of vehicle the consumer is interested in purchasing, as well as the consumer’s contact information. Dealers participating in the company’s new vehicle Leads program are provided with iControl, a proprietary technology that provides Dealers control over the volume and source of their Leads. iControl can be managed at the dealership (or by a representative of the company on behalf of the dealership) or at the Dealer group level from a web-based, easy-to-use console that makes it quick and efficient for dealerships to change their Lead acquisition strategy to adjust for inventory conditions and broader industry patterns (such as changes in gas prices or consumer demand). From the console, dealerships can easily reduce or expand territories and increase, restrict or block specific models and Lead web sources, making it much easier to manage inventory challenges and focus marketing resources more efficiently. The company’s Leads are subject to a quality verification system designed to maintain high-quality Leads and increase Lead buy rates for its Lead customers. Quality verification includes validation of consumer contact information. The company’s proprietary quality verification process also involves arrangements with third-party vendors specializing in customer validation. After a Lead has been verified, and if the company has placement coverage for the Lead within its network of Dealer customers, it sends the Lead to selected Dealers in the consumer’s geographic area that sell the type of vehicle requested by the consumer. Additionally, the company sends an email to the consumer with the Dealer’s name and phone number, and, if applicable, the name of the dealership’s internet manager. The company also sells Leads wholesale to Manufacturers for delivery to their Dealers and also to third parties that have placement coverage for the Lead outside of its Dealer network. Dealers participate in the company’s retail new vehicle Leads program by entering into contracts directly with it or through major Dealer groups. Generally, Dealer contracts are non-exclusive and may be terminated for convenience by either party with 30 days’ notice. The majority of the company’s retail new vehicle Lead revenues consists of either a monthly subscription fee or a per-Lead fee paid by its network of Dealers. The company generally reserves the right to adjust its fees at any time during the term of the contract with at least 30 days’ notice. Manufacturers (directly or through their marketing agencies) and other third parties participate in the company’s wholesale new vehicle Leads programs generally by entering into agreements where either party has the right to terminate for convenience upon prior notice, with the length of time for the notice varying by contract. Used Vehicle Leads Program: The company’s used vehicle Leads program allows consumers to search for used vehicles according to specific search parameters, including price, make, model, mileage, year and location of the vehicle. The consumer can then submit a Lead for additional information regarding a specific vehicle of interest that the company delivers to the Dealer offering the vehicle. In addition to sending Leads directly to Dealers through the company’s Lead delivery system, consumers may choose to contact the Dealer using a toll-free number posted next to each vehicle in the consumer’s search results. The company charges each Dealer that participates in the used vehicle Leads program either a monthly subscription fee or a per Lead fee. Advertising Programs The company’s Websites attract an audience of prospective automotive buyers that advertisers can target through display advertising. A primary way advertisers use its Websites to reach consumers is through vehicle content targeting. This allows automotive marketers to reach consumers while they are researching one of the company’s automotive segments, such as mini-vans or SUVs, and offers Manufacturers sponsorship opportunities to assist in their customer retention and new consumer acquisition strategies. The company’s Websites also offer Manufacturers the opportunity to feature their makes and models within highly contextual content. Through advertising placements, Manufacturers can direct consumers to their respective websites for further information. The company also offers a direct marketing platform that enables Manufacturers to target in-market consumers selectively during the often-extended vehicle shopping process. Designed to keep a specific automotive brand in consideration, the company’s direct marketing programs allow automotive marketers to deliver specific communication through either email or direct mail formats to in-market consumers during the shopping process. The company’s click traffic program is a pay-per-click advertising program. The click traffic program utilizes proprietary technology to provide consumers targeted offers based on make, model and geographic location. As consumers are conducting research on one of its consumer facing websites or on the site of one of its network of automotive publishers, they are presented with timely, relevant offers and, upon the consumer clicking the displayed advertisement, are sent to the website of one of its Dealer, Manufacturer or other advertising customers. The AutoWeb network of publisher websites reaches and engages with millions of potential car buyers each month. The company receives ongoing feedback from its customers that indicates this traffic provides highly targeted marketing opportunities and is a valuable tool to assist Dealers in selling more vehicles. Used Vehicle Acquisition As a result of the CarZeus Purchase Transaction, beginning August 1, 2021, the company acquires used vehicles from consumers and resells these vehicles wholesale to Dealers, either indirectly through third party auctions or through direct to dealer sales. The company’s used vehicle acquisition and resale operations are located in Texas with operations in San Antonio, Austin and Houston. Other Dealer Products and Services The company also offers products and services that assist Dealers in connecting with in-market consumers and in closing vehicle sales. WebLeads+: Designed to work in connection with a Dealer’s participation in the company’s Leads programs, WebLeads+ is a third-party product that offers a Dealer multiple coupon options that display relevant marketing messages to consumers visiting the Dealer’s website. With WebLeads+, consumers who visit the Dealer’s website are encouraged to take action in two ways. First, on the Dealer website, a consumer is presented with a customized special offer formatted for easy Lead submission. If a vehicle quote is requested, the Lead goes directly to the dealership management tool so the dealership sales team can promptly address the customer’s request. Second, if the consumer leaves the Dealer’s website but remains online, the WebLeads+ product keeps the coupon active in a new browser, which provides the Dealer a repeat branding opportunity and the consumer an easy way to re-engage with the Dealer’s website through submission of a Lead. The additional Leads generated by the coupons are seamlessly integrated into the company’s Extranet tool. Payment Pro: Payment Pro is a Dealer website conversion tool based on a third-party product that offers consumers real-time online monthly payment information based on an instant evaluation process. Payments are based on a third-party review of the consumer’s credit, the actual vehicle being researched, and Dealer finance rates and without requiring a credit check. The Lead goes directly into the Dealer’s management tool so that the dealership sales team can promptly address the consumer’s inquiry. Strategy The key elements of the company’s strategy include increasing traffic acquisition activities on company Websites; SEO (search engine optimization) and SEM (search engine marketing) traffic acquisition activities; continuing to enhance the quality and user experience of the company Websites; increasing the conversion rate of visitors to Leads on its company Websites; planning to continue to develop and maintain strong relationships with suppliers that consistently provide high-quality Non-Internally Generated Leads; increasing lead sales to dealers; increasing lead sales to wholesale customers; focusing on Internal Traffic Acquisition Processes; continuing to develop the click traffic program for online automotive advertisers and publishers; seeking to increase its advertising revenues; continuing to expand its products and services; and growing and enhancing its business. Seasonality The company’s quarterly revenues and operating results have fluctuated in the past and may fluctuate in the future due to various factors, including consumer buying trends, changing economic conditions, Manufacturer new vehicle production levels, Manufacturer incentive programs and actual or threatened severe weather events. Intellectual Property The company has registered trademarks with the United States Patent and Trademark Office, including AutoWeb, AutoWeb.com, the global highway logo, Autobytel, Autobytel.com, MyGarage, iControl, TextShield, and Payment Pro; and has a pending application for the registration of the CarZeus trademark. Customers The company has a concentration of credit risk with its automotive industry related accounts receivable balances, particularly with Carat Detroit (General Motors), Urban Science Applications (which represents several Manufacturer programs), and Autodata Solutions and Shift Digital. History The company was founded in 1995. The company, a Delaware corporation, was incorporated in 1996. It was formerly known as Autobytel Inc. and changed its name to AutoWeb, Inc. in 2017.