ALICIA HAYRE & NATHAN LIFebruary 1st, 2015

Autobytel Inc

Business Overview

Key Financials

Autobytel Inc. operates as a digital automotive marketing services company in the United States.

Stock Performance

Company OverviewAutobytel is an automotive marketing services company that assists

automotive retail dealers and manufacturers market and sell new and used vehicles to consumers

Ticker NASD:ABTLIPO Date March 26, 1999Market Cap. $88.0MRevenue LTM $100.9MPrice $9.75

Business Overview

AdvertisingLead FeesOther

Company DescriptionHeadquartered in Irvine, California – Founded by Pete Ellis in 1995

New Vehicle Lead Program, Used Vehicle Lead Program, Finance Lead ProgramDealer marketing products and services, and consumer-facing websites

Supplementary Products & Services Revenue Breakdown

Consumer

Autobytel Dealer

Investment Thesis Strong competitive advantages and healthy financial

position Growth through acquisitions and service expansion Overreaction from revision of AutoUSA acquisition Undervalued from valuations

Internal Analysis

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Other 3

rd Par

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d

Compe

titor/S

uppli

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Compe

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25%21%

12%

5%

13%

7%

Lead Conversion Competitive Advantages Internally Generated High-Quality

Leads Search Engine

Optimization/Marketing Partnering with other websites

Exclusive Systems/Relationships Technology patents SaleMove technology

Wide range of services Mobile Web Email

Internal Analysis Revenue growth at CAGR of 11% over past 4 years Gross Margin consistently ~40% EBITDA from -$8.8M to $4.0M over past 4 years ROA ~50% ROE ~78% ROI ~63% Debt to Capital of 21% Current Ratio of 2.0x $35M tax benefit

Internal AnalysisRecent Management Changes

New Senior Vice President, Chief Financial Officer: Kimberly Boren Kimberly has been with Autobytel since 2007 and has received a series of

promotions Current Management

President & CEO: Jeffrey Coats President & CEO since 2008 Board Member since 1996 Has held executive positions at five other

companies M.B.A in International Management

Recently purchased 16,000 shares at $10-11

Internal AnalysisStrategic Acquisitons & Investments

2010 - Received MyGarage technology – provides free mechanic advice, diagnostic tools, and access to ratings & reviews of service facilities

2013 - Received 8,000 preferred shares, as well as the Autoweb.com domain and two registered trademarks.

2013 - Received exclusivity rights to be the only provider of SaleMove’s patented online-shopping technology in the automotive industry.

2013 - Received customer contracts, technology license and domain rights, and short codes used for SMS texting.

2014 - Received 1400 new net dealers, scale, and better inventory.

2010 – Major source of new purchase requests & search engine optimization techniques

Internal AnalysisOverall Performance

AutoUSA Revision Analyst updates and

changes in short interest

27% drop

$27M $10-14M less Revenue

Purchased AutoUSA

External Analysis JD Power estimates 1% growth for 2015 domestic light vehicle retail

sales Dealers will look for high return-on-spending

Increased mobile and Internet usage Drive further demand for Autobytel’s services from dealers

Small scale compared to industry and with greater use of its limited assets

Spends significantly lower percentage of revenue on marketing/advertising

Sales & Marketing Expense Analysis (Fiscal 2013)

($ in millions) EV Revenue Sales & Marketing Expense

Sales & Marketing Expense % of RevenueCompany

TrueCar $1,477 $134 $75 56%Autobytel $80 $78 $10 13%

External Analysis - TrueCar Closest public

competitor Displays recent

purchases $113M cash on hand High cost for dealers

$300/new sold $400/used sold

Aggressive top-line at the cost of bottom-line

2009 2010 2011 2012 2013-60,000-40,000-20,000

020,00040,00060,00080,000

100,000120,000140,000

Revenue and EBITDA Growth ($M)

TRUE RevenueTRUE EBITDAABTL RevenueABTL EBITDA

External Analysis - TrueCarWeighted Average Conversion Rate

CalculationInternal Leads to Total Leads 69.0%  Conversion Rate 21.0%      14.5%External Leads to Total Leads 31.0%  Conversion Rate 12.0%      3.7%WACR 18.2%

TRUE Used

6% Close Rate

TRUE New

8% Close Rate

10% Close Rate

18% Close Rate

25% Close Rate

$400 $367

$300 $275 $220

$122 $88

Effective Cost per Sale

ValuationComparable Companies Analysis

($ in millions)Sector Price Market

Cap. Revenue Enterprise Value

EV/EBITDA EV/REVENUE P/ECompany LTM 2015E LTM 2015E LTM 2015E

TrueCar Inc Car $17.58 $1,385 $191 $1,283 (37.5) (25.5) 6.7 4.6 (30.0) 146.5 Everyday Health Inc Health 13.88 428 174 410 32.0 24.5 2.4 1.8 (96.2) 18.5 TechTarget Inc Corporate IT 11.05 357 99 335 32.2 26.5 3.4 2.8 150.3 27.6 Care.com Inc Family Care 7.97 251 106 168 (4.2) (2.6) 1.6 1.0 (5.8) (10.8)Angie's List Inc Diversified 4.59 269 302 266 (13.4) (11.2) 0.9 0.7 (10.9) (459.0)Constant Contact Inc Diversified 37.82 1,199 319 1097 27.5 22.6 3.4 2.8 99.1 28.9                        Mean     $568 $185 $520 30.6x 24.5x 2.4x 1.8x NM 25.0xMedian     357 174 335 32.0x 24.5x 2.3x 1.8x NM 27.6x                       Autobytel Inc Car $9.75 $88 $101 $84 16.0x 13.7x 0.8x 0.7x 26.3x 21.2x                       

ValuationDiscounted Cash Flow Analysis

($ in thousands) 2012 2013 2014 2015 2016 2017 2018 2019Free Cash Flow $5,000 $3,600 $2,904 $2,759 $2,973 $3,294 $3,738 $4,324Present Value       $3,167 $3,051 $3,008 $3,023 $3,086

                   WACC 13.2%   Sensitivity Analysis - Implied Upside

Exit Multiple (EV/EBITDA) 13.0x                2019 EBITDA $14,512.9       Exit MultipleTerminal Value $217,693.6                PV of Terminal Value $117,115.3       12.0x 12.5x 13.0x 13.5x 14.0xPV of Free Cash Flow $15,334.1  

WACC

12.2% 33.3% 38.0% 42.6% 47.2% 51.9%Total Enterprise Value $132,449.

4   12.7% 30.7% 35.2% 39.8% 44.3% 48.8%Debt $18,563.0   13.2% 28.1% 32.5% 37.0% 41.4% 45.8%Cash $22,316.0   13.7% 25.6% 29.9% 34.3% 38.6% 43.0%

Total Equity Value $136,202.4   14.2% 23.2% 27.4% 31.6% 35.9% 40.1%

Shares Outstanding 9029.0                Fair Value Per Share $15.08                

Current Price $9.75                Implied Upside 37.0%                

ValuationPrecedent Transactions Analysis

($ in millions)Target Date Announced Transaction

ValueImplied Forward

EV/RevenueBuyerGannett Co. Cars.com 08/04/2014 $1,800 4.93xCox Enterprises Autotrader.com 01/03/2014 $7,000 5.83xDealertrack Dealer.com 12/19/2013 $994 4.31x               Mean 5.02x      Median 4.93x         

  Autobytel Inc     0.71x         

ValuationIndustry Specific Analysis

($ in millions)Market

Cap.AVG Monthly

Unique Visitors (M)

Implied Cap/Visitor

s

Vehicles Sold in 2013

(M)Implied

Cap/VehicleCompany

TrueCar $1,385 4.3 $326 0.4 $3,463 Cars.com $2,500 14.0 $179 - - AutoTrader $7,200 16.0 $450 - -            Mean     $318    Median     326               Autobytel Inc $88 1.3 $68 0.5 $176            

Target Price

Target: $15.04

Current: $9.75

LTM EV

/EBITD

A

2015

EV/EB

ITDA

LTM EV

/Reven

ue

2015

EV/Rev

enue

2015

P/E

Preced

ent F

orward

EV/Rev

enue

Price/V

isito

rs $9.00

$10.00 $11.00 $12.00 $13.00 $14.00 $15.00 $16.00 $17.00 $18.00 $19.00 $20.00

Risks & CatalystsKey Risks

Catalysts

Questionable Management Decisions Executive compensation Tax Benefit Preservation Plan Expansion/Growth

Scale disadvantage Internet industry risks

NADA workshops, mobile training Constant M&A activity and implementation $1.2 M in stock repurchase outstanding Liolios Group to lead investor relations Sale exploration: Ancora Advisors

Investment Recommendation

Buy Autobytel (NASD: ABTL) at $9.75

Target Price: $15.04Implied Upside: 54.2%