Richard Post: New technology will catch inaccurate information.
Richard Post, who replaced Jeffrey Schwartz as CEO and president in April, says some sales leads collected from shoppers on Autobytel's own Web sites and affiliate Web sites contained incorrect information. Others were not from serious car shoppers.
The online auto marketer says revenues fell in the first quarter compared with the fourth quarter of 2004. Post blames the poor leads, not news about Autobytel's accounting troubles.
Revenues of $33.3 million during the first quarter of this year were down $700,000 from the previous quarter, prompting Autobytel to examine the accuracy of its leads.
Post attributes part of that decline to Autobytel's decision to toss out sales leads deemed to be of poor quality.
"Our intention is to turn around the revenue on the lead business and grow the dealer base that we have," Post said in an interview. "Will that take one quarter, two quarters? We have not publicly given any forecast on that."
Post said Autobytel has implemented new technology in the last 60 days to help it catch questionable sales leads before they are sold to dealerships.
A questionable lead might, for example, contain an incorrect telephone number or a wrong e-mail address preventing a dealer from sending a car shopper a vehicle price quote.
Post, 46, heads the new management team at Autobytel. He replaced Schwartz in the wake of an internal audit that late last year uncovered a host of accounting errors dating back to 2002.
Autobytel, on the verge of losing its listing on the Nasdaq stock exchange, was forced to restate its financial statements from Jan. 1, 2002, to June 30, 2004.
"The business has not stopped moving forward, even though we've had this six, seven months of going through the financials and restating them," Post said.
Post, an Autobytel director since 1999, brings a strong financial background to the CEO position. He was CFO of MediaOne Group Inc., a Fortune 500 company, where he was responsible for treasury, tax, accounting, finance, investor relations and purchasing. He was part of the team that negotiated MediaOne's $57 billion merger with AT&T.
Schwartz, the public face of Autobytel since 2001, remains with the company as vice chairman. But daily operations now are in the hands of Post, new CFO Michael Schmidt and new COO Richard Walker.
Citing competitive reasons, Autobytel won't provide details about tools it is using to improve the quality of its leads.
Post says dealerships that buy leads, advertising and software tools from Autobytel have not been affected by the financial restatement. The accounting errors understated Autobytel losses by $3.1 million from Jan. 1, 2002, to June 30, 2004.
"From what I can tell, primarily from talking to our sales force and the people doing customer support in the field, the dealers aren't focused on that," Post says. Their focus, he says, is: "Are we providing them value and quality?" According to its revised financial statements, Autobytel had record revenues of $122.2 million during 2004, a 38 percent increase over 2003.
The 10-year-old company delivered 1.1 million leads to dealerships during the fourth quarter of 2004, with average revenue per lead of $18.53. In the first quarter of 2005, Autobytel delivered about 1 million leads to dealers.
An increasingly competitive online market resulted in a decline in Autobytel's retail dealer base, which now stands at 6,200 "dealership relationships," Post says.
Autobytel does not reveal the number of dealerships with which it does business. Instead, the company logs a "dealership relationship" for each product it sells to a dealer.