CDK Global, Inc. (NASDAQ:CDK) Q3 2018 Earnings Conference Call - Final Transcript

Apr 26, 2018 • 08:30 am ET


CDK Global, Inc. (NASDAQ:CDK) Q3 2018 Earnings Conference Call - Final Transcript


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Brian MacDonald

game-changer for our industry. Drive Flex received overwhelmingly positive feedback and is like nothing else available for smaller dealers. We've been listening to our customers and have developed a user-friendly, intuitive, cloud-based DMS platform. That means no more VPN or PC requirements. The DMS will be accessible from any device, anywhere at any time.

We'll also be offering a consumption-based pricing model that flexes with the business drivers of a dealership: system users, sales volumes and repair orders. The system architecture will also allow us to deliver a faster, easier migration process. We view Drive Flex as a market changing technology for the industry. And over the coming quarters and years, this will provide us the opportunity to better serve the smaller dealer market.

While Drive Flex addresses a need within the DMS space, the Fortellis Automotive Commerce Exchange addresses a need across the entire automotive industry. The auto industry is changing at a rapid pace and dealers have found themselves with fragmented, point-to-point solutions that don't work together in a seamless fashion, perpetuating inefficiencies within the dealership and for the overall retail consumer experience. CDK as an enabler of automotive commerce is best positioned to address this problem.

Fortellis provides a common platform for integrated solutions to be delivered with secure, streamlined workflows, so that dealers can connect better with customers, sell and service more cars, and operate more efficiently. We are bringing together dealers, manufacturers, software developers, data providers and our own solutions in a way that is groundbreaking for the entire auto industry. This type of platform approach has been successful in many other major industries and now it will be available to the automotive industry as well. The timing is right and the industry is ready for the next evolution in automotive commerce. We're in the infancy of the launch and we'll continue to provide updates as we better understand the near and long-term revenue potential. However, we are very excited about interest to date and the potential new experiences that Fortellis can bring to light.

We also introduced Connected Store 2.0, which enables dealers to move towards a quote-anywhere, transact-anywhere model, and it allows consumers to complete the entire end-to-end car buying process online. CDK's Connected Store differentiates itself through the accuracy of the quote. What is shown online will match in-store, which is a common shortcoming of current point solutions in the market today. This latest product release also streamlines the process for our better user experience, making it shorter, more efficient and enjoyable for the consumer. We are actively working with multiple OEMs to roll-out this solution to their dealers.

We're also excited about the strategic alliance between Open Dealer Exchange and RouteOne to address the most challenging and complex part of the retail experience, the finance and insurance process. These two organizations have partnered to take a fragmented F&I process to a streamlined workflow that brings together dealerships, lenders and aftermarket providers into one comprehensive solution. By integrating to this solution, we