AutoTrader Group Inc. disclosed plans for a $300 million IPO in a Securities and Exchange Commission filing. The stock is expected to trade on the New York Stock Exchange, or The NASDAQ Global Market as “ATG.”
Launched in 1998, AutoTrader is the market share leader in the online auto marketplace. In the first quarter, the website drew nearly 29 million monthly unique visitors and more than 3.4 million daily vehicle listings.
The company is majority owned by Cox Enterprises Inc. Private equity shop Providence Equity Partners Inc. has a 25 percent stake.
AutoTrader reported profits of $68.1 million, on revenues of $1.02 billion. As of March 31, the company had about $884.4 million in debt.
CEO Chip Perry earned $19.6 million last year — including $700,000 salary and $1 million bonus, according to AutoTrader’s S-1 filing.
Oddly enough, AutoTrader does not own the “AutoTrader.com” trademark (it leases it from TPI Holdings Inc.) — which the company listed as a “risk factor” in the filing.
“The AutoTrader.com brand has been key to our marketing strategy for consumers, dealers and advertisers,” the company noted.
Dealer closure and consolidation could also impact AutoTrader. Dealers pay a fee to list their inventory on AutoTrader sites and license the company’s inventory management and data analytics software.
Excluding fleet sales, U.S. vehicle sales declined by 6 percent in 2009, while overall automotive advertising declined 29 percent, the S-1 noted.
“When dealers consolidate, the products and services they previously purchased separately are often purchased by the combined entity in a lesser quantity than before, leading to volume compression and loss of revenue,” the company noted. “Further consolidation or closures of automobile dealers could reduce the aggregate demand for our products and services in the future and could limit the amounts we earn for our solutions.”
AutoTrader noted its Digital Media and Software Solutions business faces intense competition. Nearly 90 percent of the company’s revenues came from its Digital Media business.
“The dealer software industry is highly fragmented…,” the filing noted.
In August, Atlanta Business Chronicle reported on IPO speculation surrounding AutoTrader. A job posting for a senior financial reporting analyst further fueled speculation.
AutoTrader.com started down the IPO road once before. The company filed in 2000 for a $65 million IPO, but slammed the brakes on those plans amidst the dot-com bust.
In an Aug. 16 interview with Atlanta Business Chronicle, CEO Chip Perry skirted the IPO question.
“There are no plans at this point for an IPO, although our owners may consider making that move at some point in the future,” he said.
AutoTrader.com, which traces its roots to the AutoTrader magazine that published car listings, is one of the few e-commerce survivors of the dot-com bust.
AutoTrader.com’s financial and market success can be traced to Cox’s decision to empower the Internet company to compete with traditional media. As a separate entity, AutoTrader.com was able to develop a business model and marketing strategy without worrying about the implications on the print product.
The AutoTrader magazine, which ceased publication in 2008, charged dealers a per-listing fee for access to a paid readership base. Consumers have free access to AutoTrader.com, while dealers pay a “very low cost” subscription fee to place their entire vehicle inventory on the Internet.
AutoTrader, in recent years, has been diversifying in the inventory management and data analytics software and services business, acquiring vAuto, Kelley Blue Book, HomeNet Automotive, and VINSolutions.
Source: Atlanta Business Chronicle