DealerTrack Holdings, Inc. Reports Second Quarter Results

Revenue Increases 49% From Prior Year; Company Updates 2006 Guidance

LAKE SUCCESS, N.Y., Aug. 2 -- DealerTrack Holdings, Inc. today reported financial results for the three months ended June 30, 2006. Financial highlights for the quarter included the following:

  GAAP Results for Second Quarter of 2006
  -- Revenue for the quarter was $43.4 million, a 49 percent increase from
     $29.2 million for the second quarter of 2005.
  -- GAAP net income for the quarter was $4.7 million, a substantial
     increase from $1.1 million for the second quarter of 2005.
  -- GAAP diluted net income per share for the quarter was $0.13, compared
     with $0.02 for the second quarter of 2005.

  Non-GAAP Results for Second Quarter of 2006
  -- EBITDA for the quarter was $13.5 million, a 73 percent increase from
     $7.8 million for the second quarter of 2005.
  -- Cash net income for the quarter was $8.1 million, more than double the
     amount of $3.9 million for the second quarter of 2005.
  -- Diluted cash net income per share for the quarter was $0.22, a
     considerable increase from $0.08 for the second quarter of 2005.

EBITDA is a non-GAAP financial measure that represents GAAP net income before interest, taxes, depreciation and amortization. Cash net income is a non-GAAP financial measure that represents GAAP net income before non-cash stock-based compensation charges (net of taxes), and amortization of acquired identifiable intangibles (net of taxes). Please see "Non-GAAP Financial Measures" for a further discussion of EBITDA, cash net income and diluted cash net income, and refer to Attachment 4 of this press release for a reconciliation of non-GAAP financial measures to GAAP financial measures.

"We are pleased with our second quarter results," said Mark O'Neil, DealerTrack's chairman and chief executive officer. "Expanding our network by adding more participants, products and services helped drive steady growth in both transaction and subscription revenue. The network effect has become a critical driver of revenue and a key source of competitive advantage for DealerTrack."

  GAAP Results for Six Months ended June 30, 2006
  -- Revenue for the last six months was $81.3 million, an increase of 55
     percent from $52.5 million for the same period in 2005.
  -- GAAP net income for the last six months was $8.1 million, more than
     double the amount of $3.1 million for the same period in 2005.
  -- GAAP diluted net income per share for the last six months was $0.22, an
     increase of more than three times the amount of $0.07 for the same
     period in 2005.

  Non-GAAP Results for Six Months ended June 30, 2006
  -- EBITDA for the last six months was $24.2 million, an increase of 68
     percent from $14.4 million for the same period in 2005.
  -- Cash net income for the last six months was $14.8 million, more than
     double the amount of $7.3 million for the same period in 2005.
  -- Diluted cash net income per share for the last six months was $0.40,
     more than double the amount of $0.16 for the same period in 2005.

  Business Statistics

There were 22,031 active dealers in the DealerTrack network as of June 30, 2006, a 6 percent increase from 20,742 at June 30, 2005. The number of active financing sources in the DealerTrack network as of June 30, 2006, was 243, up 72 percent from 141 a year ago. Transactions processed through the DealerTrack network for the second quarter were approximately 17.4 million, a 30 percent increase from approximately 13.5 million transactions processed through the network for the second quarter of 2005. The number of subscriptions in the network as of June 30, 2006, was 18,064, a 59 percent increase from 11,351 a year earlier. The number of dealers with at least one subscription in the network was 9,371, a 37 percent increase from the second quarter of 2005. As of June 30, 2006, over 42 percent of dealers in the network subscribed to at least one product within the network.

Other Second Quarter Activity

Strategic highlights of the second quarter included the initial launch of the DealerTrack Aftermarket Network(TM). As of June 30, 2006, ten providers had been signed to participate in this extension of the DealerTrack network, which connects dealers with aftermarket product and service providers. DealerTrack also acquired the assets of Global Fax, L.L.C. to provide services to its financing source customers, including the digitization of automotive retail installment contracts.

Management Change

Vincent Passione, president, DealerTrack, Inc., has announced his intention to leave the company to pursue other opportunities. "We thank Vince for all the contributions he has made during his tenure at DealerTrack and wish him the very best in his future endeavors," said O'Neil.

Guidance

DealerTrack updated guidance for its 2006 expected financial performance. This guidance includes expected third quarter charges of approximately $5.0 million in non-cash stock compensation expense and approximately $0.8 million in cash compensation expense related to the departure of the executive officer discussed above.

  Expected GAAP Results for full year 2006
  -- Revenue for 2006 is expected to be between $160 million and $165
     million.
  -- GAAP net income for 2006 is expected to be between $12.5 million and
     $13.5 million. Excluding the charges noted above, net of tax, the
     expected range for GAAP net income would be between $16 million and $17
     million.
  -- GAAP diluted net income per share for 2006 is expected to be between
     $0.34 and $0.36, based on a weighted average of 37.1 million diluted
     common shares outstanding for 2006. Excluding the charges noted above,
     net of tax, the expected range of GAAP diluted net income per share
     would be between $0.43 and $0.46.

  Expected Non-GAAP Results
  -- EBITDA for the year is expected to be between $41.2 million and $43.2
     million. Excluding the charges noted above, the expected range for
     EBITDA would be between $47 million and $49 million.
  -- Cash net income for the year is expected to be between $28.5 million
     and $29.5 million. Excluding the charges noted above, the expected
     range for cash net income would be between $29 and $30 million.
  -- Diluted cash net income per share is expected to be between $0.77 and
     $0.80, based on a weighted average of 37.1 million diluted common
     shares outstanding for 2006. Excluding the charges noted above, the
     expected range for diluted cash net income per share would be between
     $0.78 and $0.81.

O'Neil added, "Our focus on execution and innovation continues to deliver better than expected performance. As a result, we have adjusted our guidance for 2006. The current surplus of automotive inventory and the strong possibility of additional manufacturer incentives lead us to expect an active automotive retail environment for the second half of 2006. We believe that the deep penetration of our network within the industry and the growth potential of our newest products and services will enable us to achieve our performance targets and continue to deliver value to our customers."

DealerTrack will host a conference call to discuss its second quarter results and expectations for 2006 performance and other matters on Wednesday, August 2, 2006, at 5:00 p.m. Eastern Time. The conference call will be webcast live on the Internet at http://ir.dealertrack.com/releases_financial.cfm. A replay will be available on the DealerTrack website until August 16, 2006. In addition, a live audio of the call will be accessible to the public by calling 800-289-0496 (domestic) or 913-981-5519 (international); no access code is necessary. Callers should dial in approximately 10 minutes before the call begins.

Non-GAAP Financial Measures

In this release, the Company's EBITDA and cash net income disclosures are not presented in accordance with generally accepted accounting principles (GAAP) and are not intended to be used in lieu of GAAP presentations of net income. EBITDA represents GAAP earnings excluding interest, taxes, depreciation and amortization expenses. Cash net income represents net income excluding stock-based compensation expense (net of taxes), and amortization of acquired intangibles (net of taxes). EBITDA and cash net income are presented because management believes they provide additional information with respect to the performance of our fundamental business activities and are also frequently used by securities analysts, investors and other interested parties in the evaluation of comparable companies. Management believes the EBITDA and cash net income information is useful to investors for these reasons. EBITDA and cash net income are non-GAAP financial measures and should not be viewed as an alternative to GAAP measures of performance. Management believes the most directly comparable GAAP financial measure for EBITDA and cash net income is GAAP net income and has provided a reconciliation of EBITDA to GAAP net income, and cash net income to GAAP net income, in Attachment 4 to this press release.

About DealerTrack (http://www.dealertrack.com/)

DealerTrack Holdings, Inc. is a leading provider of on-demand software and data solutions for the U.S. automotive retail industry. The company's online credit application processing product automates and accelerates the automotive financing process, while its integrated subscription-based software enables dealers to receive consumer leads, compare financing and leasing options, sell insurance and other aftermarket products, document compliance, and execute financing contracts electronically. Over 22,000 dealers, with more than 85% of all franchised dealers; 250 financing sources, including nine captives and the 20 largest U.S. independents; and other service and information providers are active in the DealerTrack network.

Safe Harbor for Forward-Looking and Cautionary Statements

Statements in this press release regarding DealerTrack's expected 2006 performance, the development and expansion of DealerTrack's products and services, the demand for DealerTrack's products, DealerTrack's growth, dealer behavior and the dynamics of the automotive retail environment, and all other statements in this release other than the recitation of historical facts are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995). These statements involve a number of risks, uncertainties and other factors that could cause actual results, performance or achievements of DealerTrack to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements.

Factors that might cause such a difference include: increased competitive pressure from other industry participants, the inability to execute any element of DealerTrack's business strategy, including selling additional products and services to existing and new customers; DealerTrack's success in expanding its customer base and product and service offerings; the impact of the automotive retail industry on DealerTrack's business; the impact of some vendors of software products for automotive dealers making it more difficult for our customers to use our products and services, and other risks listed in the Company's reports filed with the SEC, including DealerTrack's 2005 Form 10-K. These filings can be found on DealerTrack's website at http://www.dealertrack.com/ and the SEC's website at http://www.sec.gov/. Forward-looking statements included herein speak only as of the date hereof and the Company disclaims any obligation to revise or update such statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events or circumstances.