LAKE SUCCESS, NY., May 6, 2008 "(pressreleasepoint)" -- DealerTrack Holdings, Inc. (Nasdaq:TRAK) today reported financial results for the quarter ended March 31, 2008 and revised its guidance for the full year 2008. GAAP Results for First Quarter 2008 * Revenue for the quarter was $64.3 million, a 24 percent increase from $51.7 million for the first quarter of 2007. * GAAP net income for the quarter was $2.3 million, compared to $4.8 million for the first quarter of 2007. * GAAP diluted net income per share for the quarter was $0.05, compared to $0.12 per share for the first quarter of 2007.Non-GAAP Results for First Quarter 2008 * EBITDA for the quarter was $13.3 million, compared to $14.6 million for the first quarter of 2007. EBITDA for the quarter includes $3.7 million in costs resulting from pending litigation and professional fees associated with an acquisition the company chose not to complete. * Cash net income for the quarter was $9.3 million, compared to $9.5 million for the first quarter of 2007. * Diluted cash net income per share for the quarter was $0.22, compared to $0.24 per share for the first quarter of 2007.Included in GAAP net income and Cash net income for the first quarter of 2008 are $2.3 million (net of taxes) in legal fees resulting from pending litigation and professional fees associated with an acquisition the company chose not to complete. Both GAAP and Cash net income per diluted share were unfavorably impacted by $0.05 as a result of these charges. EBITDA is a non-GAAP financial measure that represents GAAP earnings excluding interest, taxes, depreciation and amortization expenses. Cash net income is a non-GAAP financial measure that represents GAAP net income before non-cash stock-based compensation expense (net of taxes) and amortization of acquired identifiable intangibles (net of taxes). See "Non-GAAP Financial Measures" below for a further discussion of EBITDA and cash net income, and refer to Attachment 4 of this press release for reconciliations of GAAP financial measures to non-GAAP financial measures. "Our 24% revenue growth over the first quarter of 2007 demonstrates DealerTrack's ability to generate strong revenue growth even in the face of macro economic headwinds. We have seen a shift in credit practices by many of our financing source customers. These customers have purposefully reduced the number of dealers they service in an effort to curtail their credit origination volume. This reduction in the number of loans that financing sources are willing to compete for has resulted in a decrease in transaction volume of up to 30% from these financing source customers. Despite these factors, the strength of our model and the value of our offerings enabled us to continue to grow in both the transaction and subscription side of our business," said Mark O'Neil, chairman and chief executive officer of DealerTrack. "In addition, we believe that our investments in 2008 in new products and services position us for strong growth in the future." "Our financial performance in the quarter was directly impacted by charges of $3.2 million relating to our outstanding patent litigation and $0.5 million associated with an acquisition that the company chose not to complete. Combined, these same expenses amounted to only $0.6 million in the first quarter of 2007," O'Neil continued. "The litigation charges are not expected to continue past the third quarter of this year." Business Statistics There were 22,457 active dealers in the DealerTrack network as of March 31, 2008. The number of active financing sources in the DealerTrack network as of March 31, 2008 reached 503, up 46% percent from 344 a year earlier. Transactions processed in the network for the first quarter were approximately 23.9 million, an increase from approximately 22.7 million for the first quarter of 2007. The number of revenue-generating subscriptions as of March 31, 2008 was 30,098, a 29% percent increase from 23,267 at the end of the first quarter of 2007. Guidance for 2008 Annual Performance Our revised guidance reflects the decrease in transaction volume by many subprime lenders and includes our lowered expectation for interest income, previously estimated at $9.8 million, now estimated at $5.4 million for the year. Also reflected is the year to date auto sales including April's Seasonally Adjusted Annual Rate (SAAR) of 14.4 million units, a 10-year low. Our revised guidance for the full year 2008 is as follows: Expected GAAP Results * Revenue for the year is expected to be between $268 million and $272 million compared to the previous estimate of $270 million to $276 million. * GAAP net income for the year is expected to be between $21.0 million and $22.6 million, compared to the previous estimate of $24.8 million to $26.2 million. * Diluted GAAP net income per share for the year is expected to be between $0.48 and $0.52 compared to the previous estimate of $0.56 to $0.60.Expected Non-GAAP Results * EBITDA for the year is expected to be between $67.3 million and $70.0 million compared to the previous estimate of $71.2 million to $73.5 million million. * Cash net income for the year is expected to be between $45.8 million and $47.4 million as compared to the previous estimate of $50.4 million to $51.8 million. * Diluted cash net income per share for the year is expected to be between $1.06 and $1.10 as compared to the previous estimate of $1.14 to $1.18.Our revised guidance includes an expected reduction in interest income of $2.7 million (net of taxes), $0.3 million (net of taxes) for professional fees associated with an acquisition we chose not to complete and $0.3 million related to an increase in the expected effective tax rate to approximately 40%. Collectively, these items have a negative impact of approximately $0.08 on our per diluted share earnings guidance for the full year of 2008. This guidance assumes 43.3 million weighted average diluted shares outstanding. Our guidance for 2008 does not take into account any shares that may be repurchased in conjunction with the stock repurchase plan previously approved by the Board of Directors. "Although a number of manufacturers still maintain a 2008 forecast of 15.5 million new vehicle sales, our revised guidance is based upon the lending and sales environments we saw in the first four months of 2008. Additionally we see a reduction in interest income due to the current interest rate environment," said O'Neil. "While we have not yet been able to repurchase stock during the past month due to legal restrictions, we remain committed to repurchasing stock in the open market and expect the $75 million stock repurchase program authorized by our Board of Directors to begin shortly." DealerTrack will host a conference call to discuss its first quarter 2008 results and other matters on May 6, 2008 at 5:00 p.m. Eastern Time. The conference call will be webcast live on the Internet at http://ir.dealertrack.com/eventdetail.cfm?eventid=52821. In addition, a live audio of the call will be accessible to the public by calling 877-548-7912 (domestic) or 719-325-4916 (international); no access code is necessary. Callers should dial in approximately 10 minutes before the call begins. A replay will be available on the DealerTrack website until May 16, 2008. 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 (www.dealertrack.com) DealerTrack Holdings, Inc. (Nasdaq:TRAK) is a leading provider of on-demand software and data solutions for the U.S. automotive industry. Our solutions enable dealers to receive consumer leads, submit credit applications, compare financing and leasing options, sell insurance, vehicle accessories and other aftermarket products, document compliance, and execute financing contracts electronically. In addition, the DealerTrack Arkona dealer management system (DMS) is used by dealerships nationwide. Over 22,000 dealers, 500 financing sources and many other service and information providers are active in the DealerTrack network. For more information visit www.dealertrack.com.