Mobility Global, Inc. (MBGL) Earnings Call Transcript & Summary

Let's get started. I'm very pleased to be joined by Bill Eager, CEO of Mobility Global as well as Matt Calderon, CFO. Bill and Matt, thank you for being here with us today.

Thank you for having us. Thank you.

So Bill, I'd like to start with you, Mobility Global began trading as a public, separate spin-off from S&P Global on July 1, a dedicated leadership team, single strategic agenda just focused on automotive. What can Mobility do differently as an independent company that it couldn't do within S&P Global? And where is that focus already showing up in the business?

Sure. Thanks, George. And as you mentioned, we did spin out of S&P Global on July 1. And as you can imagine, there's been quite a bit of excitement throughout the business with 3,500 people in Mobility Global as we go out on our own. I think it's really showed up in 2 places. The first 1 being more structural and then the second 1 being us really controlling our destiny. So from the structural side, what I would say is 1 year ago or 1.5 years ago, we were 5 separately run businesses. And so part of the spin process has been bringing those businesses together into 1 and leveraging the assets of the individual sideload businesses across the business. And so we're starting to see that show up in a bunch of different places. It's early. But I have a conference room right outside my office. And 2 months ago, there were folks from automotiveMastermind and the CARFAX business getting together, building some joint product plans and really talking about how we can share both data and brand assets across the customer base for both, especially with the shared customers. Another example would be our plan was to launch the CARFAX product in Germany at the beginning of '27. And part of the shift was our CARFAX entity in Europe now leveraging some of the CARFAX U.S. platform. And because they're leveraging that platform and some of the folks and some of the expertise, we were able to move that up, and we launched Germany in early July. And so those are just 2 examples. It's a multi-year process. So I would set expectations that we will see these things coming online, but it will be another year or 2 before we really feel the full effect of being out on our own. And so from a structural standpoint, that's what we're seeing. The other thing is that S&P is a great parent company. And the 4, 5 years we were with S&P, I always felt like we had a great owner. But when it came to competing for resources, a lot of the investments that S&P made over that period of time were geared toward their core divisions and the investments that multiple divisions could take advantage of. And S&P has many customers that they see show up in multiple divisions. And so now that we're on our own we're able to go after -- everything we go after has to do with automotive information. And so as we prioritize everything is in our world, our category, which is great.

Yes. Bill, you've previously noted that the company has more than 90% of revenues that's tied to unique data, proprietary IP, analytics that's supported by 177,000 unique data sources, 60 billion vehicle records. As AI makes applications easier to build, what elements of Mobility's competitive advantage do you think become more valuable? And how can the company convert those advantages into greater adoption and greater wallet share?

Yes. Great question. And when I think about it, I think at our core, we're a data company. And on the CARFAX side of our business, we've built the business on unique VIN level data. A lot of that data, we have partnerships and relationships to get that data but the majority of it is sitting behind a firewall or a paywall somewhere. So it's not out there readily available for somebody. And when I think of the AI impacting our business, I really do think about it as an accelerant for our business. And we see that showing up, especially in our core assets. If you think of our core assets being our data and our data estate, our brands, and then the networks that we have and the way we're embedded in the industry, and I'll just touch on the data and maybe a little bit on the brand. On the data side, the way AI is showing up is I really see it doing 3 things for us right now; one, as we ingest data, AI is helping us get so much more out of those feeds that we've established over the last 20, 30 years. And so that when I think of building our product in Europe or in some of the countries we've launched there, those learnings and those tools and those setups were able to apply globally now. The second is the type of insights we are able to get out of that data. So we're able to get insights that we never were able to get 5, 7 years ago. And then the third is there's new product opportunities that we have. And I'll just give you an example of what I mean. Traditionally, in the CARFAX business, we've done a really good job of telling people the history of the vehicle. But the history can tell you a lot about the future of the vehicle. And what AI allows us to do is start to predict the future of the vehicle and the reliability of that vehicle at a VIN level, right? So you've always been able to kind of say, from a make model, which vehicles are the most reliable. Now can we get it down to VIN to where somebody can look at the actual car they're going to buy and understand in the next 3 years, should I be preparing for a major repair or a major expense or is there a low likelihood that, that would happen? So that's on the data side. The other thing we're seeing is that where our products show up in the marketplace, especially on the CARFAX side, data rarely shows up by itself, right? It's showing up with our brand attached to it. And so in the world we're moving into where people are saying, "Can I trust this? Or can I trust that? I'm getting data overload." We're finding that the brand is actually becoming more and more valuable. And people wanted attached to the data so that, that consumer confidence in whatever that data point is remains high because they know where it's coming from.

Right. Matt, let's talk a little bit about medium-term targets. So Mobility's medium-term organic revenue growth target is 7.5% to 10%. What needs to improve from current levels to reach that range? And how much of the acceleration should come from the core business versus new solutions versus, say, international expansion?

Yes. Thanks. And we said at our Investor Day and we give you a rubric were 5% to 7% of growth from the core, 1% to 2% from new product innovation, and 1% to 2% from international, and that's not just Europe. We have a very large, well-established business in Canada that has a couple of our products, but not the full product suite, and that's on the table. I think it's -- we see opportunities across the business, not just in CARFAX and CARFAX U.S. that Bill talked about, globally in Canada and in Europe, but on the B2B side as well. I'll just highlight, Bill covered a bunch of the opportunities on the CARFAX side. Some things we're seeing in the B2B space, right, automotiveMastermind product, an exceptional product that helps sell cars faster and target new customers on behalf of OEMs and dealers. We've got a new product there that's getting a lot of traction where OEMs and dealers are bringing their data together with our data, and it's making it more efficient. So I think the nice thing about our business is they're not 1 thing, George. We see a lot of opportunity across the business. And as Bill said, now that we are a stand-alone company with the ability to draw assets and resources across the company and prioritize investment across the company. We're going to run a planning process this year where we have some hypotheses, but best idea wins. And we've got a lot of levers.

Right. And I guess as you look across those 3 buckets that get you to the medium-term target, where do you see most opportunity to improve over the near- to medium-term?

I can take that. So if you think of the 3 big buckets for us, enhancing our existing products, launching new products, and then our international expansion, we feel like we have really strong opportunity in all 3. I would say that the -- enhancing our existing products and growing that is probably the 1 that will drive the most short term. We do have new products that were launched in the first half of this year that are being really well-received. And so we think those 2, both are in the short getting us to the mid-term big drivers. We have a material international business, but it's 1 that -- I look at that as a little bit more mid- to long-term from a growth perspective. I think we said on Investor Day that the international piece might constitute 1 point or 2 of the 7.5 to 10. And so the other 2 are really the big drivers of that growth.

We're pushing across all 3 fronts. If you think about what we highlighted just in Q2 alone, we launched a homegrown product and something new, automotiveMastermind, both of which we're going to the base subscription. essentially, we're saying to our customers, "Here's more added value for the base subscription you get." Obviously, more added value hopefully will accrue benefit to us in subsequent years. That's one. We launched product and listings. That's new, it's an add-on that second bucket we launched in Germany, that's the third. So obviously, I agree with Bill. But we're going on all fronts, right? And I think the team is energized, and that's really our objective for next year is how do we filter, and prioritize, and sequence these range of opportunities. But not just [ One Mobility ], but AI is allowing us to innovate and launch products so much faster, we see significant opportunity.

Right. Bill, let's talk a little bit about competition in the CARFAX business. So CARFAX has about 40,000 dealer customer relationships with 36-plus OEM certified pre-owned programs. It's used 28 million times per month. What would you say are the most durable sources of CARFAX' competitive advantage? And how are you extending that lead?

Yes. I'd start by saying that the CARFAX business, we partner with OEMs and dealers to get our information into the hands of consumers. And if you think of the consumer life cycle, consumer will shop for a car, we'll buy a car, they'll go through a period of time where they own that car and service that vehicle. And then ultimately, they're going to sell it. And we see different competitors in each 1 of those stops around the life cycle. Very good competitors, by the way. And -- but different. I would say that we are the 1 player that is hyper-focused on the automotive information needs of consumers. Our true north in the CARFAX business is that consumer. And that consumer drives what we do. And so we, obviously, pay attention to the competition in each 1 of those areas. But it really is the needs of the consumer that's driving us. And when I think of our advantage, our advantage comes from those unique assets that we've been building for decades to address those consumer needs. So if you think of our data state, our data has been purposefully built to answer those consumer questions. Our brand is all about trust and transparency in the consumer space in automotive. When I think of the network and how embedded we are within the industry, we really have -- you had mentioned some of the -- how it's easier to build an application today. We've been application-agnostic for decades, where our differentiation comes from the combo of that brand and data, not the application itself. And so we're embedded in hundreds and hundreds and hundreds of different applications throughout the industry. So -- and we will continue to invest in those. We have found that as we invest in one, it tends to drive the others. And as those assets get stronger and stronger, they are what's feeding our products, they're what's feeding the exchange for the data that we get and it's at the heart of everything we do. And so as we build those very differentiated strategic assets over time, we think it's what will set us apart from our competitors at each 1 of the stops.

Let's stay with CARFAX and talk about the go-to-market strategy. So packaging advantage, listings, and service loyalty together lengthened the sales cycle recently and Mobility restored an individual product sales motion in June. What gave you conviction that this was the right change? And what indicators will confirm that the new sales motion is working?

Yes. So George, at the end of last year, what we did is we packaged our products together. And we changed our sales motion, if you will, from selling individual products to selling that package. Our conviction on that offering is still very high. And what we have changed is, one, the path to get there and then two, the incentive we give to our sales reps. And so what we found is right out of the gate, the low-hanging fruit signed up for the package. As time went on, we found more and more dealers that had the 2 decision-makers in the dealership that had to decide on that package, those that would decide on a listings product and those that would serve -- decide on a service loyalty product weren't always in sync. And 1 might say, "I need 6 more months or I don't have it in my budget until November and this 1 was ready to go." And our sales incentive was incenting our reps to wait until they were both ready and they sign them up on the package. Hindsight's 2020. We've switched back to where we lead with them individually. If they want to do them both at the same time, that's fine. And then we've changed the sales incentives to match that new approach. And I think that we're early. We're a couple of months in, but I would say that we're fairly confident it was the right decision and we're headed on the right path.

So related to that, the average CARFAX dealer uses about 1.5 to 2 products and listings and service loyalty retain a significant amount of white space. So what has historically limited product attachment and what product represents the largest incremental revenue opportunity?

Yes. And so the -- our products' build off each other. So we have our core vehicle history product. That's the CARFAX Advantage program. And what that does is that unlocks the data not just for the vehicle history report, but the data that would power listings or would power the service loyalty product. And that was our flagship product. That's where we started in the vehicle history space. If you think of those other 2 areas, whether it be the listing area or the service loyalty area, 1, we got into 10, 12 years ago, 1 we got into 5 or 6 years ago. So we are the new kid on the block in actually both those areas, even though we have the strongest recognized consumer brand and data that nobody else has. So we've built the listing business in a fairly measured way over the last 10 years. We've seen nice consistent growth. We think we have an opportunity to accelerate that and do a lot more in that space. And then on the service loyalty side, we have 53 million consumers that are using our app today to manage their vehicle. In the U.S., we'd like that to be north of 100 million, but there are 1 billion consumers around the globe that own a vehicle, and we'd like to help as many of them as we possibly can. And so when I think of those 2 opportunities, 1 is on the sales side, 1 is on the service side, the sales side is more immediate. There's things we can do on the listing side to really drive our revenue over the next 12 to 18 months. On the service loyalty side, we'll continue to gain adoption of that product. Once we have dealers using it, the retention is really high. The value that it delivers is really high. And I think that we will see good -- strong adoption in the franchise dealers in the U.S., but it's also a product that will help us internationally get more and more consumers using us to manage their vehicle. And if our end goal is to help those billion consumers, we're going to want a relationship with as many of them as we possibly can. And so we feel like we're at 53 million, and we're just getting started.