This summary is based on the third quarter fiscal 2006 earnings call conducted by Autobytel Inc. (ABTL: chart) on November 9, 2006.

Management:

- VP of IR: Jennifer Klein
- President and CEO: Jim Riesenbach
- EVP and CFO: Mike Schmidt

Key Investors Issues

- Revenue dropped 8% from $30.6 million in 2005 to $28.2 million.
- Net loss was $7.9 million or 19 cents a share, from $0.28 million or 1 cent a share in the prior year.
- It also announced an important new business relationship with AOL.

Year to Date Highlights:

- Revenues decreased 9.1% to $86.6 million from $95.3 million in the prior year.
- Net loss was $24.2 million or 57 cents a share, down 279% from a loss of $6.38 million or 15 cents a share in 2005.
- Cash and cash equivalents amounted to $23.6 million, down from $29 million in 2005.

Third Quarter Highlights

Revenue totaled $28.2 million, a decrease of $2.4 million or 8% from $30.6 million in 2005 as average revenue per purchase request continued to decline.

- Revenue mix was 58% leads, 23% CRM, 15% advertising, and 4% data applications and other revenues.
- Revenue from lead fees totaled $16.5 million, down $2.1 million or 11% from the prior year.
- Average revenue per purchase request was $18.77 compared to $18.51 and $19.20 for the second quarter of 2006 and the third quarter of 2005 respectively.
- The firm delivered approximately 710,000 purchase requests compared to 830,000 purchase requests in 2005, with 480,000 purchase requests delivered to retail dealers and 230,000 purchase requests delivered to enterprise dealers.

Average revenue per finance lead was $14.53 compared to $12.55 in 2005 as the company changed how it calculated the number of vehicle lead referral customers.

- The company now calculates a vehicle lead referral customer based on the dealership''s physical establishment not on the dealer franchise, and it counts the customer in a single physical establishment who subscribes to more than one of the new car lead referral programs as one customer.
- The company had 2,520 new car lead referral dealerships and 1570 used car lead referral relationships.
- Through the enterprise sales initiatives, the company has 10 direct relationships with automotive manufactures or their automotive buying service affiliates encompassing 20 brands and 370 retail finance lead customers, an increase of 18% from one year ago.

Advertising revenue was $4.3 million, a decline of 11% from 2005 as advertising page views were 107 million compared to 111 million in the prior year.

- CPM per ad page view was $35.18 which compares to a CPM per ad page view of $32.32 and $38.40 for the second quarter of 2006 and the third quarter of 2005 respectively.
- Revenue from CRM services was $6.4 million, an increase of $300,000 from 2005, while revenues from data applications and other was $1 million.
- Cost of revenues, which includes traffic acquisition cost or TAC totaled $13.8 million or as a percentage of revenues cost of revenues was 49%, compared to 42% in 2005.
- Sales and marketing expense was $6.1 million or 22% of total revenue compared to $7.3 million and $6.1 million for the second quarter of 2006 and the third quarter of 2005 respectively.

Net loss was $7.9 million or 19 cents a share, from $0.28 million or 1 cents a share in the prior year due to higher costs and lower revenues.

- The company had $32.6 million in domestic cash, cash equivalents, and short-term investments.
- Day sales outstanding or DSO was 61 days compared to 58 days in the previous quarter.
- The company incurred $1.4 million of costs associated with stock-based compensation and spent $3 million for legal costs enforcing patents and $800,000 related to the implementation of previously-announced strategic initiatives.

Strategic Initiatives:

- The firm made significant progress on the new strategic initiatives, continued efforts to get the company on a path back towards profitability and in the endeavors to position the company for long-term growth.
- Autobytel’s commitment to customer quality and dealer support continues to drive positive results for dealers according to the JD Power and Associates 2006 dealer satisfaction with online buying services study.
- According to the study, Autobytel.com generated a higher sales closing ratio on customer leads than any other large new car leads service.

The firm was recently notified that Hitwise, the leading online competitive intelligent service ranks Autobytel in the top five by visits among automotive classified sites for the third quarter.

- Autobytel can capture the strong potential upside that exists in the internet automotive space today and expand its position as a leading automotive site for consumers.
- The firm has been working towards the launch of new internet-based products and services for both consumers and dealers while streamlining.
- It recently initiated a process to explore strategic alternatives for the RPM and AIC business units including the possibility of strategic alliances with complementary businesses and/or divestitures.
- It also announced an important new business relationship with AOL where Autobytel will become the exclusive new car leads fulfillment network to AOL Autos, a top consumer automotive destination that generates a significant amount of high quality consumer purchase requests.

The firm experienced the sequential decrease on an absolute basis in total operating expenses despite increased cost related to investments in new strategic initiatives and continued legal cost associated with litigation to protect intellectual property.