Autobytel, one of the largest providers of sales leads to auto dealers, has purchased longtime rival Dealix for $25 million in cash, Autobytel said today.
Autobytel bought Dealix, and a smaller company, Autotegrity, from CDK Global, the industry’s largest provider of dealership operating software.
The deal brings together two of the most-prominent providers of leads, which are vehicle-buying prospects who want to be contacted by a dealer. They typically cost dealers $20 a piece.
The Dealix acquisition adds 600 U.S. franchised dealers to Autobytel’s customer base and 300 used-vehicle dealerships, the company said.
Autobytel’s customer network now stands at 4,954 U.S. dealerships, according to a company statement.
In an interview today, Autobytel CEO Jeff Coats said the company sold 6.6 million leads to dealerships last year and Dealix about 5 million.
Both companies have made efforts in recent years to increase the number of leads they generate internally through advertising on search engines such as Google and on their consumer vehicle shopping sites. Autobytel’s branded shopping sites are Autobytel.com and Car.com. Dealix’s big consumer-facing site is UsedCars.com, he said.
Those internal leads tend to result in more vehicle sales, Coats said.
Dealix also generated more used-car leads than Autobytel, an area that Autobytel has been attempting to beef up, Coats said.
“This gives us a nice big boost down that path,” he said.
The transaction was financed in part by Union Bank N.A. through a new $15 million senior secured term loan and by drawing on the $2.8 million remaining balance of Autobytel’s $8 million working capital revolving credit line.
With the acquisition, Autobytel has increased its guidance for expected 2015 fiscal revenue to a range between $128 million and $132 million. That’s an increase of 20 percent to 24 percent from 2014, the company said.
Autobytel’s first-quarter revenue dipped to $26.2 million from $27 million in the year-earlier quarter, reflecting an acquisition last year.
Coats attributed the revenue decline to “expected churn” in dealers coming and going from AutoUSA, a lead site that Autobytel bought from AutoNation in 2014.
Earnings, however, improved in the quarter. Net income rose to $773,000, or 9 cents per share, compared with $370,000, or 4 cents a share, in the year-earlier quarter.