Profits for dealership technology giant CDK Global Inc. slid in its fiscal first quarter as the company worked to wind down its digital marketing operations. CDK said Tuesday it hopes to complete a sale of that business by the end of the 2019 calendar year.
The Hoffman Estates, Ill., company reported Tuesday that net income attributable to CDK for the 2020 fiscal first quarter ended Sept. 30 was $82 million, down 9.2 percent from the same quarter a year earlier.
First-quarter revenue, however, rose 11 percent to $494.6 million, as the company increased the number of customers in its core dealership management system business in North America, as well as the average revenue collected per site. CDK reported an increase in the number of automotive DMS customer sites in North America for the third straight quarter.
"Overall this was a very good quarter, and I'm pleased with the tremendous progress we've made," CDK CEO Brian Krzanich said on a conference call late Tuesday.
CDK's profit from continuing operations, which exclude the digital marketing business up for sale, rose 2.5 percent to $78.4 million in the first quarter.
CDK in June said it planned to sell its digital marketing business, which includes such services as advertising and dealership websites, within a 12-month period. Krzanich said on Tuesday's earnings call that CDK has received "a great deal of interest" in the digital marketing business and hopes to close on a transaction by the end of this calendar year.
The company this year lost its exclusivity deal with General Motors to be the sole provider of dealership websites for the automakers' brands. GM recently offered its dealers the choice of four website providers, including CDK, starting in 2020.
CDK shares closed up 1.3 percent Tuesday to $52.81. CDK released its earnings after the market close on Tuesday.
The company affirmed its 2020 fiscal-year guidance Tuesday, with expectations of revenue between $2 billion and $2.05 billion and net earnings attributable to CDK ranging from $340 million to $370 million.