The overall market in Q1, I would say was okay. It wasn’t like the market sort of like really, really came back just yet. Having said that when you read all the GMV, not just the volume, the dealer wholesale volume, I would say across the industry, but it was not stellar yet. But you are seeing overall, you saw one of our competitors even recently say used car values are starting to go down. You’re starting to see, we look at all the signs of market health. We like where the industry is going. At the end of the day, used car values go down would mean that independent dealers would buy these cars more affordably. They can then retail it to their end consumers. So, when we look at all the signs, even though some of them at the moment from an investor perspective, you may look at like GMV going down was like a concern on ARPU.
I wouldn’t worry about that too much. We feel good about our ARPU. So GMV going down will actually mean independent dealers can go buy these cars from trades and others. They can retail them to their end consumers. So to your point, I would say not a lot changed from last quarter. Our feeling is things will probably get better for us.
Michael Graham : All right, perfect. Thanks a lot for all that color.
Bill Zerella: Yeah, thank you, Mike.
Operator: The next question we have is from Ron Josey of Citigroup. Please go ahead.
Jamesmichael Sherman-Lewis : Hi, this is Jamesmichael. This is a question for Ron. Quickly for me, it’s encouraging to see the progress in transport. It’s a 95,000 unit source and the 300 basis points improved revenue margin. Can you expand on the operational work you’re doing to improve transportation profitability?
George Chamoun: Yeah, the margin expansion and enhancements to transport have been consistent, obviously, and we’ve done a good job of continuing to add to our product and tech, lane optimization, pricing, size of the vehicle, all the different attributes. We keep working on it. We’re doing this, actually, in obviously not an easy market. So overall, we’re very pleased with our team. We’ve got more work to do in this area, meaning that we’ve got more investments in the technology of ACV Transportation, but we’re really just so pleased with the intelligence we’re building into the lane pricing and sort of scaling lane by lane across the country.
Jamesmichael Sherman-Lewis : That’s helpful. Thank you. And then I wanted to turn to ClearCar. Can you provide some additional color on how the lead gen conversion rates and margins are improving, and the specific leverage you have to improve execution? Thank you.
George Chamoun: Yeah, certainly. ClearCar is going really well. I mean, we keep growing additional rooftops out there. Dealers love the product. Consumers really like the product. We’re seeing incredible feedback. One of the things we did this quarter, to give you all a little bit more color, is we went out and we had a video done of a dealer group called Lester Glenn Auto. I really would encourage all of you to watch this video. It will give our investors really the voice of the customer. You’ll hear them talk about how these tools are helping them, at the end of the day, make more money, close more transactions with the end consumer. There’s a quote in there about how they are doing so much better on their own internal conversion.
And then think about it, like optimizing their inventory. Optimizing their inventory is really important. The last couple of years, dealers have been retailing cars they should not have been retailing. They really were wholesale cars. So we’d encourage you to watch this video, because it’ll give you a customer that’s using ClearCar, ACV MAX, and our marketplace, our ACV Auctions marketplace. So I think I’ll leave you with that, at least. I think that’ll be better than me just telling you what’s in the video. I really would love for you to actually watch it.
Jamesmichael Sherman-Lewis : Fair enough. We’ll take a look. Thank you so much.
George Chamoun: Thank you.
Operator: The next question we have is from Rajat Gupta of JP Morgan. Please go ahead.
Rajat Gupta : Great. Thanks for taking the questions. Just had one clarification from the prior answers. I think Bill, you mentioned that organic OpEx was up a low single digit. Does that also include some of the incremental investments related to AutoIMS and other integration efforts? And what would be the organic volume number tied to that low single digit OpEx number? And I’ll follow up. Thanks.
Bill Zerella: Hey, Rajat. It’s Bill. Yeah so we, as you know we’re not breaking out specifically any organic versus inorganic numbers, other than to say that the Alliance acquisition from last quarter will represent about 5% of revenue for the year, so a little less than that for the quarter. The organic growth in OpEx does include partially some of the investments that we’re making in connection with the acquisitions that we did, but the balance of that is part of the M&A bucket if you will, since those integration costs directly relate to the M&A transactions. And if you remember, in terms of the EBITDA that we inherited as part of those deals, we used part of that EBITDA to fund those integration costs.
Rajat Gupta : Got it. That’s helpful. And just, I think in the past you’ve given us some color in market share in every quarter. What would you say your D2D market share performance was in the first quarter?
George Chamoun: Yeah Rajat, if you remember last call, we said we’re going to start to do market share once a year. Obviously we are doing it more often than that prior, when the market was all crazy and wild. But having said that, just to give you a little bit more color I guess, but I guess moving forward just keep in mind, we really like to be doing this once a year, is one of our – one of the outside sources out there, AuctionNet, which is a NAAA, mentioned that in their report that physical auction volumes were down 5% year-over-year. So that’s not giving you like – that just kind of gives like a framework of at least what collectively the physical auctions said that dealer wholesale specifically, even though commercial was up, dealer wholesale was down 5%. So at least it’ll help you kind of get an idea. But having said that, I mentioned we’ll be doing that moving forward now that things are starting to normalize. We’ll start to do that once a year.
Rajat Gupta : Got it. Got it. Just one more on OpEx, if I may. You obviously mentioned like the step-up in the re-marketing integration, just the integration of the new re-marketing centers. Should we treat this like OpEx step-up this year, because of that as more of like a one-time thing or – and then you have like better revenue versus OpEx leverage going forward? For example, like this year you are diving to like 17% OpEx growth and 27% revenue growth, for example. Does that ratio get better going forward? Should we assume this is more of like a one-time dynamic for this year? I’m not sure if that question was clear, but any color would be helpful. Thanks.
