The wind-down of CDK Global Inc.'s digital marketing business continued to drag down profit last quarter as the company worked to complete a sale to a private equity-backed marketing agency.
CDK reported Tuesday that it largely dodged a significant financial hit from the novel coronavirus pandemic in its fiscal third quarter, which brought much of the auto industry to a standstill in the last few weeks of March as government leaders worked to contain COVID-19, the respiratory illness caused by the virus.
Yet the company said the impact of the pandemic is the main reason it lowered revenue and earnings forecasts for the rest of the fiscal year, and that CDK has taken several steps to contain costs and preserve liquidity given the uncertainty of how long it will last.
"CDK remains focused on helping our customers adapt to the current challenges of the COVID-19 pandemic, while we continue to enable them to complete their mission-critical operations," CDK CEO Brian Krzanich said in a statement.
The Hoffman Estates, Ill., dealership management system giant reported Tuesday that net income attributable to CDK for the quarter that ended March 31 was $57.6 million, down 42 percent from the same quarter a year ago.
Fiscal third-quarter revenue, meanwhile, rose 3 percent to $516.3 million. That's as the number of North American DMS customer sites dipped slightly from the prior quarter, to 14,741, though the number of sites increased from the same quarter last year.
CDK's net income from continuing operations, which do not include the digital marketing business, increased 5.7 percent to $94.4 million in the quarter. The company reported a $34.9 million net loss in its digital marketing business.