CDK Global Inc.’s revenue rose in the company’s fiscal second quarter, along with its customer counts, but net earnings dipped slightly.
The suburban Chicago dealership management system giant on Thursday said that the second quarter of its 2022 fiscal year, which ended Dec. 31, benefited from growth in both its primary DMS business, as well as through new digital retailing and insurance technology products CDK purchased last year.
CDK added automotive DMS customer sites for the 12th straight quarter, reaching 9,181 as of Dec. 31. That is up from 9,107 as of Sept. 30, 2021, and from 8,997 as of Dec. 31, 2020.
“We continued to see the benefit of our focus on product innovation and on customer success, which resulted in another quarter of solid growth DMS sites and average revenue per site,” CDK Global CEO Brian Krzanich said in a statement. “This growth is coming from both our core business and contributions from recent acquisitions.”
CDK last year acquired insurance technology company Salty Dot Inc., which allows consumers to buy auto insurance at the same time they’re buying a vehicle. CDK executives said adding Salty to its product suite will allow dealerships to access a new revenue market and improve customers’ car-buying experience. A few months earlier, CDK acquired digital retailing provider Roadster.
The company’s subscription revenue rose 6.4 percent in its second quarter to $349.3 million, while transaction revenue dipped 1.8 percent to $38.4 million in light of ongoing supply chain issues, the company said on an earnings call with analysts. CDK receives transaction fees for connecting dealerships to companies that process credit reports and vehicle registrations.
CDK’s financial results covered continuing operations, excluding its digital marketing business, which it sold in April 2020 to marketing agency Ansira Partners Inc., and its international business, which it sold in March 2021 to private equity firm Francisco Partners. The company’s net earnings from continuing operations rose 8.5 percent in its second quarter to $63.8 million, but net earnings attributable to CDK slipped when factoring in discontinued operations.
Also this week, CDK launched CDK CarSource, a digital wholesale marketplace the company says will help dealers buy and sell used vehicles and automate the process of listing inventory on the marketplace.
Fiscal Q2 revenue: $436.7 million, up 7.5% from a year earlier
Q2 net earnings attributable to CDK: $63.7 million, down 6.7% from a year earlier
Q2 adjusted EBITDA: $167.7 million, up 7.8% from a year earlier
Fiscal 2022 guidance: Revenue, $1.79 billion to $1.82 billion; net earnings attributable to CDK, $245 million to $275 million