Autobytel Announces $6.9 million Loss In Third Quarter 2007

IRVINE, Calif.--Autobytel Inc. , a leading Internet automotive marketing services company, today announced financial results for the third quarter ended September 30, 2007.

Revenue for the 2007 third quarter rose to $24.8 million from $23.7 million in the prior-year period and $24.3 million in the second quarter of 2007. The year-over-year increase in revenue was primarily the result of a 7% increase in lead fee revenue compared with the third quarter of last year, offset by a 4% decline in CRM services and other revenue.

Autobytel reported a loss from operations of $6.9 million for the 2007 third quarter, compared with a loss of $8.3 million in the third quarter of 2006 and a loss of $5.8 million in the 2007 second quarter. The year-over-year reduction in operating loss relates mostly to lower patent infringement litigation expenses and other professional fees. On a sequential basis, the 2007 third quarter operating loss was impacted primarily by increased amortization and depreciation expense related to the build-out of MyRide.com and higher cost of revenue. Non-cash share based compensation expense was $1.2 million and $1.4 million in the third quarters of 2007 and 2006, respectively, and $1.0 million in the second quarter of 2007.

Net loss in the third quarter of 2007 was $6.3 million, or $0.14 per share. This compares with a net loss of $7.9 million, or $0.19 per share, in the third quarter of 2006 and a net loss of $1.7 million, or $0.04 per share, in the second quarter of 2007, including a $3.0 million gain from the sale of the company's Retention Performance Marketing (RPM) business and a $0.5 million gain from the sale of the company's Automotive Information Center (AIC) division.

“Our third quarter revenue surpassed expectations primarily as the result of strength in our leads business,” said Jim Riesenbach, president and CEO of Autobytel. “At the same time, we are making real progress against several top-line revenue growth initiatives while taking aggressive steps to right-size our cost structure to bring it more in line with where our business is today. While we are not satisfied with the company’s current financial results, we have outlined our goal to achieve cash flow break even before working capital and capital expenditure requirements by the end of the second quarter of 2008. We expect to achieve this goal through a combination of cost cutting and revenue growth.

“The October launch of MyRide.com, our flagship consumer site, is an important step toward achieving this goal, and a critical step forward for Autobytel as we continue our focus on taking full advantage of the significant opportunities that exist in the online automotive sector,” concluded Riesenbach.

Domestic cash and cash equivalents and, to the extent applicable, restricted international cash and cash equivalents, and short-term investments, totaled $28.3 million at September 30, 2007, the same as at the end of the second quarter of 2007 and up $2.2 million from $26.1 million at December 31, 2006.

Recent Highlights/Metrics

(in thousands, except average revenue per purchase request or finance lead and percentages)		3Q 2007			2Q 2007			3Q 2006
Lead fee revenue		$17,576			$16,678			$16,461
CRM services revenue*		$2,661			$2,527			$2,766
Advertising revenue		$4,318			$4,947			$4,295
Purchase requests		825			771			712
Retail		58	%		60	%		68	%
OEM and Enterprise		42	%		40	%		32	%
Average revenue per purchase request		$17.65			$17.70			$18.77
Finance leads		180			195			212
Average revenue per finance lead		$16.74			$15.55			$14.63
* Revenues associated with the company’s RPM and AIC businesses have been reported as discontinued operations.

Conference Call

Autobytel management will host a conference call today at 5:00 p.m. ET/2:00 p.m. PT to discuss its third quarter 2007 financial results. The conference call will be available to all interested parties through a live webcast at www.autobytel.com (click on “Investor Relations” and then click on “Conference Calls”). Please visit the website at least 15 minutes prior to the start of the call to register and download any necessary software. For those unable to listen to the live broadcast, the call will be archived for one year on Autobytel’s website. A telephone replay of the call will also be available for approximately one week by dialing (800) 642-1687 (domestic) or (706) 645-9291 (international) and entering conference ID: 21403933.

About Autobytel Inc.

Since launching the first car-buying website in 1995, Autobytel Inc.’s mission has been to empower automotive consumers with the tools and information they need to make smart, well-informed vehicle purchasing and ownership decisions. The company has helped millions of car shoppers and generated billions of dollars in car sales for dealers. Today, the company’s innovative, consumer-driven flagship site, MyRide.com, expands the company’s mission across the automotive purchase and ownership life cycle. As the first vertical search experience for the automotive marketplace, MyRide.com is designed to help Internet-savvy consumers FIND, SEE, BUY and LEARN anything automotive and BELONG to a diverse community of people who have similar automotive interests.

By providing a convenient and comprehensive automotive consumer experience across the purchase and ownership lifecycle, Autobytel provides new value and touch-points for automotive marketers. Through MyRide.com and Autobytel’s marketing network, the company connects dealerships with a steady, diverse stream of exceptionally motivated, serious shoppers, while providing both dealers and manufacturers with precision-targeted brand and product marketing opportunities. The company's advanced web-based advertising and marketing programs also help dealers and manufacturers build relationships with customers, as well as help them to efficiently manage and convert online business.

(Financial tables follow)

AUTOBYTEL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
(unaudited)
			September 30,				December 31,
				2007				2006
ASSETS
Current assets:
	Domestic cash and cash equivalents		$	28,270			$	22,743
	Restricted international cash and cash equivalents			-				360
	Short-term investments			-				3,000
	Accounts receivable, net of allowances for bad debts and customer credits of $674 and $798, respectively			14,675				17,250
	Prepaid expenses and other current assets			4,661				1,819
	Current assets held for sale			-				2
	Total current assets			47,606				45,174
Property and equipment, net				11,909				7,954
Goodwill				67,738				70,697
Intangible assets, net				345				674
Other assets				4,920				197
	Total assets		$	132,518			$	124,696
LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable			7,190			$	9,271
	Accrued expenses			6,275				7,607
	Deferred revenues			1,659				2,138
	Current liabilities held for sale			-				393
	Other current liabilities			1,534				1,090
	Total current liabilities			16,658				20,499
Deferred rent - non-current				223				195
Other Long Term Liabilities				216				-
Other liabilities - non-current				8,010				-
	Total liabilities			25,107				20,694
Minority interest				-				184
Commitments and contingencies
Stockholders' equity:
	Preferred stock, $0.001 par value; 11,445,187 shares authorized; none outstanding			-				-
	Common stock, $0.001 par value; 200,000,000 shares authorized; 43,738,633 and 42,665,840 shares issued and outstanding, respectively			44				43
	Additional paid-in capital			295,888				289,862
	Accumulated deficit			(188,521	)			(186,087	)
	Total stockholders' equity			107,411				103,818
	Total liabilities, minority interest and stockholders' equity		$	132,518			$	124,696

AUTOBYTEL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share and per share data)
(unaudited)
			Three Months Ended								Nine Months Ended
			September 30,								September 30,
				2007				2006				2007				2006
Revenues:
	Lead fees		$	17,576			$	16,461			$	51,485			$	52,209
	Advertising			4,318				4,295				13,971				12,385
	Customer relationship management (CRM) services			2,661				2,766				7,768				8,360
	Other			208				210				614				592
	Total revenues			24,763				23,732				73,838				73,546
Costs and expenses:
	Cost of revenues			14,959				11,715				39,311				36,767
	Sales and marketing			5,742				5,023				17,603				17,670
	Product and technology development			5,107				5,381				15,152				14,521
	General and administrative			5,839				9,597				21,102				28,759
	Amortization of intangible assets			42				301				422				921
	Patent litigation settlement			-				-				(9,899	)			-
	Total costs and expenses			31,689				32,017				83,691				98,638
	Operating loss			(6,926	)			(8,285	)			(9,853	)			(25,092	)
Interest and other income				639				457				1,595				1,400
Foreign currency exchange gain (loss)				-				4				(7	)			9
	Loss from continuing operations before provision for income taxes and minority interest			(6,287	)			(7,824	)			(8,265	)			(23,683	)
Provision for income taxes				(16	)			(118	)			(23	)			(118	)
Minority interest				-				(5	)			-				-
	Loss from continuing operations			(6,303	)			(7,947	)			(8,288	)			(23,801	)
Income (loss) from discontinued operations				24				68				5,854				(409	)
	Net (loss) income		$	(6,279	)		$	(7,879	)		$	(2,434	)		$	(24,210	)
Loss per share from continuing operations:
	Basic		$	(0.14	)		$	(0.19	)		$	(0.19	)		$	(0.56	)
	Diluted		$	(0.14	)		$	(0.19	)		$	(0.19	)		$	(0.56	)
Net (loss) income per share:
	Basic		$	(0.14	)		$	(0.19	)		$	(0.06	)		$	(0.57	)
	Diluted		$	(0.14	)		$	(0.19	)		$	(0.06	)		$	(0.57	)
Weighted average common shares used in computing income (loss) per share:
	Basic			43,660,961				42,437,708				43,291,107				42,323,352
	Diluted			43,660,961				42,437,708				43,291,107				42,323,352

AUTOBYTEL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(unaudited)
		Nine Months Ended September 30,
			2007				2006
Cash flows from operating activities:
Net income (loss)		$	(2,434	)		$	(24,210	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization			2,151				1,639
Amortization of intangible assets			465				1,150
Provision for bad debt			301				139
Provision for customer credits			1,051				1,363
Write-off of capitalized internal use software			-				264
(Gain) loss on disposal of property and equipment			-				111
Gain on sale of AIC			(2,762	)			-
Gain on sale of RPM business			(3,072	)			-
Share-based compensation			3,758				3,860
Minority interest			-				-
Foreign currency exchange loss (gain)			7				(9	)
Changes in assets and liabilities, net of the effects of discontinued operations:
Accounts receivable			(82	)			(430	)
Prepaid expenses and other current assets			(160	)			354
Other assets			(127	)			50
Accounts payable			(1,190	)			2,392
Accrued expenses			(969	)			335
Deferred revenues			(580	)			(1,556	)
Other liabilities			1,391				(51	)
Net cash used in operating activities			(2,252	)			(14,599	)
Cash flows from investing activities:
Maturities of short-term and long-term investments			3,000				9,000
Purchases of short-term and long-term investments			-				(2,998	)
Change in restricted international cash and cash equivalents			-				(99	)
Distribution of foreign investment			354				-
Purchases of property and equipment			(7,317	)			(2,179	)
Proceeds from sale of property and equipment			1				12
Proceeds from sale of AIC			2,573				-
Net proceeds from sale of RPM business			7,093				-
Net cash provided by investing activities			5,704				3,736
Cash flows from financing activities:
Distribution to minority interest shareholder			(184	)			-
Proceeds from exercise of stock options and awards issued under the employee stock purchase plan			2,259				1,143
Net cash provided by financing activities			2,075				1,143
Net increase (decrease) in cash and cash equivalents			5,527				(9,720	)
Cash and cash equivalents, beginning of period			22,743				33,353
Cash and cash equivalents, end of period		$	28,270			$	23,633
Supplemental disclosure of cash flow information:
Cash paid during the period for income taxes		$	85			$	318