Wed Jul 3, 2019
Author: RV News
The dealership software provider CDK Global is planning to divest its digital marketing business and focus on its automotive software operations. The company announced the decision last week, after losing an exclusivity agreement with General Motors earlier this year.
CDK Global said the potential sale includes all assets of its North American advertising segment and parts of its retail solutions, mobile advertising and website services, according to a CDK Global regulatory filing.
Revenue for the company’s North American advertising business fell 18 percent in the third quarter that ended March 31. CEO Brian Krzanich said in an earnings call that the unit "has continued to be a headwind on total company growth."
The company plans to make the changes within a year. CDK is working with Allen & Co. to find possible buyers and evaluate deals.
CDK's digital marketing business brought in about 19 percent of revenue and 13 percent of pretax earnings in the nine months ended March 31, the filing shows.
During CDK's 2018 fiscal year, the company's retail solutions segment made $1.6 billion, while its advertising segment had revenue of $305.8 million. Core auto software represented 85 percent of revenue in 2018.
The company's advertising segment took a hit this year when GM told its Chevrolet, Buick and GMC dealers they would be able to use approved vendors beyond CDK, which had been its exclusive provider and manager of websites.