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Other than as set forth below, there have been no material changes from the risk factors described in our Annual Report on Form 10-K.
−Removed: The COVID-19 pandemic and related restrictions have adversely affected, and could continue to adversely affect, our business, financial condition, liquidity and results of operations.
−Removed: The novel coronavirus disease 2019 (“COVID-19”) pandemic and related restrictions have resulted in a widespread health crisis that have adversely affected businesses, economies and financial markets worldwide, and have caused significant volatility in U.S.
+Added: The COVID-19 pandemic and related restrictions have materially and adversely affected, and could continue to materially and adversely affect, our business, financial condition, liquidity and results of operations.
+Added: The novel coronavirus disease 2019 (“COVID-19”) pandemic and related restrictions have resulted in a widespread health crisis that has adversely affected businesses, economies and financial markets worldwide, and have caused significant volatility in U.S.
and international debt and equity markets.
−Removed: Our business, financial condition, liquidity and operating results have been, and will continue to be, adversely affected by COVID-19 and related restrictions.
+Added: Our business, financial condition, liquidity and operating results have been, and will continue to be, adversely affected by the COVID-19 pandemic and related restrictions, including any resurgences of the pandemic.
For example, the COVID-19 pandemic and related restrictions have caused a widespread increase in unemployment and are expected to result in reduced consumer spending and an economic slowdown or recession.
Substantially all of our revenue is generated from subscription services offered to automotive dealers and our national advertising offerings to original equipment manufacturers (“OEMs") and other advertisers in or endemic to the automotive industry and our business may be negatively affected during times of low automobile sales and high unemployment.
−Removed: To the extent that such a weakened economy impacts our customers’ ability or willingness to pay for our services or our vendors’ ability to provide services to us, we could see our operations, liquidity and financial condition negatively impacted.
−Removed: Dealers operate in a highly competitive market and are vulnerable to both decreased demand for new and used vehicles and periods of economic slowdown or recession.
−Removed: Furthermore, dealerships have temporarily or permanently closed and more may close in the near future in light of the COVID-19 pandemic and related restrictions.
+Added: To the extent that a weakened economy continues to impact our customers’ ability or willingness to pay for our services or our vendors’ ability to provide services to us, our operations, liquidity and financial condition could be negatively impacted.
+Added: OEMs and automobile dealers operate in a highly competitive market and are vulnerable to both decreased supply and demand for new and used vehicles, as well as corresponding changes in vehicle pricing.
+Added: Furthermore, certain OEMs have temporarily ceased production and certain dealerships have temporarily or permanently closed and more may close in the future in light of the COVID-19 pandemic and related restrictions.
Negative changes in the financial condition of dealers has resulted and may continue to result in decreased subscription revenue and reduced demand for our services.
Moreover, the impact of the COVID-19 pandemic and related restrictions on dealers may materially reduce our number of dealer customers in the future.
−Removed: Additionally, OEMs may reduce their advertising spend on our platforms due to the impact of the COVID-19 pandemic and related restrictions on the automotive industry.
+Added: Additionally, OEMs have and may continue to reduce their advertising spend on our platforms due to the impact of the COVID-19 pandemic and related restrictions on the automotive industry.
All of these factors could adversely impact our profitability and financial results.
−Removed: In an effort to assist our dealer customers impacted by the COVID-19 pandemic and related restrictions, we have announced, among other measures, financial relief in the form of certain invoice credits of 50% for April 2020 and 30% for May and June 2020.
−Removed: These discounts and reduced consumer spending will negatively impact our revenue in the near term and may negatively impact other results of operations in the near term and, if not effective in mitigating the effect of the COVID-19 pandemic and related restrictions on our dealer customers, may adversely affect our business and results of operations more substantially over a longer period of time.
−Removed: With respect to managing our expenses, we have multiple initiatives underway to adjust our expenses with changes in revenue.
+Added: In an effort to assist our dealer customers impacted by the COVID-19 pandemic and related restrictions, we provided, among other measures, financial relief in the form of certain invoice credits of 50% for April 2020 and 30% for May and June 2020.
+Added: These discounts and reduced consumer spending have negatively impacted our revenue and results of operations in the near term and, if not effective in mitigating the effects of the COVID-19 pandemic and related restrictions on our dealer customers, may adversely affect our business and results of operations more substantially in the long term.
+Added: With respect to managing our expenses, we have implemented multiple initiatives to adjust our expenses in response to changes in revenue.
These steps have included an employee furlough, reduction in force, salary reductions, freezes on hiring and temporary labor, deferral of merit and promotion increases;
−Removed: a reduction of our marketing expense by aligning our variable marketing spend with shopper demand, while carefully maintaining consumer engagement as evidenced by our strong organic traffic;
+Added: a reduction of our marketing expense, while carefully maintaining consumer engagement as evidenced by our strong organic traffic;
partnering with vendors to reduce cost;
and significant reductions of non-essential spending.
−Removed: However, we cannot currently predict whether these measures will be effective in mitigating the impact of the COVID-19 pandemic and related restrictions on our operations, liquidity and financial condition or whether these measures will affect the productivity of our workforce, reduce consumer traffic to our websites or otherwise affect our operations.
+Added: Despite our efforts, we cannot accurately predict whether these measures will be effective in mitigating the impact of the COVID-19 pandemic and related restrictions on our operations, liquidity and financial condition or whether these measures will affect the productivity of our workforce, reduce consumer traffic to our websites or otherwise affect our operations.
We may be required to implement additional expense-reduction measures or amend our debt instruments in the future if the COVID-19 pandemic and related restrictions persist over a longer period, which could further adversely impact our operations, liquidity and financial condition.
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The impact of the COVID-19 pandemic and related restrictions may affect our ability to comply with such covenants.
−Removed: We will continue to monitor our liquidity position and covenant obligations and are in active conversations with our Lenders.
−Removed: We may seek to amend our Credit Agreement to provide greater comfort that we will be able to remain in compliance with our obligations but we may not be able to do so on terms that are acceptable or to the extent necessary to avoid a default, depending upon conditions in the credit markets, the length and depth of the market reaction to the pandemic and our ability to compete in this environment.
+Added: We have taken steps to strengthen our financial position during this period of heightened uncertainty.
+Added: In June 2020, we entered into an amendment to our Credit Agreement (the “Second Amendment”) that provides for a waiver with respect to the Total Net Leverage Ratio and Consolidated Interest Coverage Ratio financial covenants for the covenant testing periods through December 31, 2020 (the “Covenant Adjustment Period”).
+Added: As of June 30, 2020, our liquidity, as defined in the Credit Agreement, was approximately $232.2 million including cash and cash equivalents and availability under the revolving credit facility.
+Added: We may further seek to amend our Credit Agreement to provide greater comfort that we will be able to remain in compliance with our obligations but we may not be able to do so on terms that are acceptable or to the extent necessary to avoid a default, depending upon conditions in the credit markets, the length and depth of the market reaction to the pandemic and our ability to compete in this environment.
We may also seek to raise funds through debt or equity financing in the future to fund operations, significant investments or acquisitions that are consistent with our strategy.
+Added: Due to the risks created by the COVID-19 pandemic and related restrictions the conditions of the capital markets may be more volatile and uncertain.
If we need to access the capital markets, there can be no assurance that financing may be available on attractive terms, if at all.
+Added: For information related to debt, see Note 5 (Debt) to the accompanying Consolidated Financial Statements included in Part I, Item 1., “Financial Statements” of this Quarterly Report on Form 10-Q.
We will continue to actively monitor the issues raised by the COVID-19 pandemic and related restrictions and may take further actions that alter our business operations, as may be required by federal, state, or local authorities, or that we determine are in the best interests of our employees, customers, partners and stockholders.
−Removed: It is not clear what the potential effects any such alterations or modifications may have on our business, including the effects on our OEM and dealer customers, suppliers or vendors, consumers or on our financial results .
+Added: It is not clear what the potential lasting effects any such alterations or modifications may have on our business, including the effects on our OEM and dealer customers, suppliers or vendors, consumers or on our financial results .
The impact of the COVID-19 pandemic and related restrictions may also heighten other risks discussed in our Annual Report on Form 10-K, which could adversely affect our business, financial condition, liquidity and results of operations.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.