Mobility Global's Carfax Strategy Shift and Macro Guidance Contradictions in 2026 Q2 Call

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Date of Call: Aug 7, 2026

Financials Results

• Revenue: $468 million, a 7% increase over the prior year period
• Operating Margin: Adjusted EBITDA margin of 43.2%, approximately 40 basis points higher than the prior year period

Guidance:

• Revenue for full fiscal year 2026 expected to be $1.87 to $1.885 billion, representing year-over-year growth of 6.9% to 7.7%.
• Adjusted EBITDA for full year 2026 expected to be between $745 million and $760 million, implying an adjusted EBITDA margin of approximately 40%.
• No incremental currency impact assumed in the second half, with modest sequential improvement in constant currency growth rate expected versus the first half.
• Adjusted EBITDA margins expected to decline in the second half due to seasonality and incremental corporate expenses as a standalone public company.

Business Commentary:

Revenue and Segment Performance:

• Mobility Global reported revenue of $468 million for Q2 2026, reflecting a 7% increase over the prior year period, with all revenue being organic.
• The Carfax segment grew 8% in the quarter, with subscription-based revenue up approximately 8% year-over-year, while B2B segment grew 4%.
• The growth was impacted by changes in go-to-market strategies and softer automotive activity outside the U.S., particularly affecting transactional revenue.

Adjusted EBITDA and Margins:

• The company delivered $202 million in adjusted EBITDA, reflecting a 7% increase from the prior year quarter, with an adjusted EBITDA margin of 43.2%.
• The strong margin was maintained despite the softer top-line performance due to effective cost management and disciplined operations.

Strategic Initiatives and Product Launches:

• New offerings such as Carfax Homegrown and Carfax Showroom were launched to enhance customer value and engagement.
• Automotive Mastermind extended its service-to-sales functionality with SMS offers, aiming to increase efficiency and dealer engagement.

International Expansion:

• Mobility Global launched Carfax Germany in early July, leveraging strategic assets to enter Europe's largest automotive market.
• The expansion is part of a broader strategy to capitalize on growing consumer demand for trusted automotive information in new markets.

Guidance and Market Outlook:

• The company lowered its full-year revenue guidance to 6.9% to 7.7% growth, reflecting the impact of macroeconomic conditions and strategic adjustments.
• The guidance incorporates expectations of modest sequential improvement in constant currency growth rates, driven by new product launches and revised go-to-market strategies.

Sentiment Analysis:

Overall Tone: Neutral

• Management acknowledges Q2 results were below expectations due to go-to-market challenges and softer automotive activity, but highlights strong adjusted EBITDA margins and successful new product launches. The tone is focused on executing strategic priorities and building momentum for future growth, with guidance provided that incorporates current challenges and expected improvements.

Q&A:

• Question from Scott Wurzel (Wolf Research): Bill, just wondering if you can talk a little bit more about the changes that you're making on the go-to-market side on Carfax and what we can expect to see going forward now versus the strategies you had deployed in the past.
  Response: Shifted from selling Carfax's three core products as a package to selling them individually, recalibrating sales incentives to allow dealers to add products at their own pace, as the previous approach lengthened sales cycles and affected sales rates.

• Question from Scott Wurzel (Wolf Research): And just as a quick follow-up, just on the revenue guidance, wondering if you can give us just any color on how we should think about revenue growth rates in Carfax and B2B the second half of the year.
  Response: Guidance implies modest sequential improvement in constant currency growth, more consistent with last year, with underlying momentum expected to build into 2027, particularly in Carfax, while B2B is anticipated to remain relatively flat.

• Question from Craig Huber (Huber Research Partners): Can you just go through for us real quick, A, how long that's going to take? What kind of cost that might be? It's in your numbers, I assume. I think you've talked about that. And what the major benefits are.
  Response: Integration of databases and B2B/Carfax is a multi-year journey, roughly two years to complete, with benefits already realized such as joint product roadmaps and faster international launches like Germany; ongoing benefits include enhanced product value and operational efficiency.

• Question from Craig Huber (Huber Research Partners): Do you feel that [Middle East turmoil] is impacting any of your businesses? And if so, which ones?
  Response: It has had a marginal impact, particularly on transactional revenue internationally, such as in Canada and affecting the B2B planning business, but is not a significant driver.

• Question from Craig Huber (Huber Research Partners): Do you think that [the spin-off] impacted at all your operations here versus how you were thinking things were going, say, a few months ago?
  Response: Yes, it had some impact, but the primary issue was the go-to-market strategy change for Carfax which did not perform as expected; the team is focused on making adjustments to get performance back on track.

• Question from Jeff Mueller (Baird): For Carfax US, can you just remind us from a rooftop penetration or runway perspective where things stand for, I guess, the three main products, Advantage, Listings, and Carfax Service loyalty.
  Response: Penetration details not provided, but opportunities exist: Advantage can add more independent dealers; Listings has green fields as a newer player; Service loyalty has high ROI and less than half of franchise dealers on it, with growth expected.

• Question from Jeff Mueller (Baird): On B2B subscriptions, we still have somewhat limited data. The subscription growth in B2B was outsized in Q1. It slowed somewhat in Q2. I think there was a call out of a comp it's, but just keep your walk through what's going on there.
  Response: Q2 slowdown due to FX and tough comps from a strong Q2 last year; underlying subscription growth is stable and around 6%, with focus on driving it to high single digits.

• Question from Will Cheon (RBC Capital Markets): Now that you're on the halfway mark [of integration], what's one of the next big opportunities that you see in the pipeline? How should we think about as pace of synergies start to flow through things?
  Response: Immediate opportunities include activating Automotive Mastermind offers within Carfax's car care platform and accelerating international expansion (e.g., Germany) using combined company strengths, with growth vectors in enhancing current products, launching new products, and expanding into new markets.

• Question from Will Cheon (RBC Capital Markets): And maybe just as a quick follow up on the guidance, if you guys are able to provide a little bit more color, I guess maybe around assumptions on the macro or industry backdrop.
  Response: Guidance does not assume any improvement in the macro situation; it is based on current trends and internal execution factors like go-to-market changes and new product launches.

• Question from Tony Kaplan (Morgan Stanley): I was wondering if you're already starting to see improvement [from go-to-market changes], and I was wondering also if that was what was sort of embedded in... the guidance... that revenue implies a sequential improvement in the back half.
  Response: Pivot in go-to-market occurred in June with early momentum; improvement is part of guidance, which also includes new product launches and overall business momentum, but does not assume macro improvement.

• Question from Tony Kaplan (Morgan Stanley): I was hoping you could talk about how your value proposition changes for an autonomous vehicle manufacturer.
  Response: Provides data and forecasting tools (e.g., FAST) to help automakers plan for future vehicle markets, serving 40 top manufacturers globally; information is critical for their long-term product and market decisions.

• Question from Wazir Amin (Barclays): On the revised guidance, since you're not assuming macro improvement and B2B is expected to be pretty stable, are you seeing the main variable that'll get you to your guidance range, especially the high end, is the piece of improvement in CARFAX?
  Response: Carfax improvement is a key driver for sequential growth in the second half, but the narrow guidance range incorporates variables like transactional revenue and FX, with momentum building for 2027.

• Question from Wazir Amin (Barclays): And then on the comment made about fewer than half of the franchise advantage [using service loyalty]... what's been historically the limited adoption and does returning to a different sales motion make that opportunity easier to capture?
  Response: Adoption is lower due to longer sales cycle requiring two approvals; focus is on demonstrating high ROI and retention post-installation, with confidence in growth as dealers increasingly prioritize service loyalty.

• Question from Keegan Anico (Wells Fargo): Can you just describe the moat around your B2B business and particularly the Polk database?
  Response: Moat is based on unique data capture from multiple industry connection points and the longitudinal depth of 20+ years of data, which elevates data quality and insight value, creating a competitive advantage.

• Question from Rajiv Beja (Morningstar): I have a big picture question on the listings business... how do you balance the growth opportunity in listings against the risk of creating a greater opening for competitors such as auto-check?
  Response: Focus remains on consumer needs, with confidence in core assets; Carfax and dealers benefit from the best product, with competition viewed as part of a dynamic market that the company is well-positioned to handle.

• Question from Rajiv Beja (Morningstar): And then as my follow-up, I wanted to drill down on advertising spend... how should we think about advertising as a percentage of revenue over the next few years?
  Response: Advertising spend is increasing modestly as investment, funded by operational scale and efficiency; the company views it as beneficial and plans to spend more, especially as AI and integration drive further efficiency.

Contradiction Point 1

Carfax Go-To-Market Strategy

Conflicting signals on whether the sales strategy is being adjusted back to individual product selling.

Scott Wurzel (Wolf Research) - Scott Wurzel (Wolf Research)

2026Q2: The company is now recalibrating by reverting to selling products individually, allowing dealers to adopt the full package at their own pace... - [Bill Eager](CEO)

What changes are being made to Carfax's go-to-market strategy, and how do future expectations differ from past strategies? - Scott Wurtzel (Wolfe Research)

2026Q2: The company is now recalibrating: shifting back to selling products individually... - [Bill Eager](CEO)

Contradiction Point 2

Timeline for B2B and Carfax Database Integration

Inconsistency on the projected completion duration for the integration.

Craig Huber (Huber Research Partners) - Craig Huber (Huber Research Partners)

2026Q2: The process is expected to be largely complete in about two years. - [Bill Eager](CEO)

What is the timeline, cost, and major benefits of integrating databases between the B2B and Carfax sides? - Craig Huber (Huber Research Partners)

2026Q2: The integration is a multi-year journey (approximately 2 years to complete). Early benefits are already being realized... - [Bill Eager](CEO)

Contradiction Point 3

Macroeconomic Assumptions in Revenue Guidance

Contradiction on whether the guidance assumes any sequential improvement in the business.

Scott Wurzel (Wolf Research) - Scott Wurzel (Wolf Research)

2026Q2: The guidance implies modest sequential improvement, especially excluding the impact of FX from the first half. - [Matt Calderon](CFO)

Can you explain the expected revenue growth rates for Carfax and B2B in the second half of the year under the revised guidance? - Will Qi (RBC Capital Markets)

2026Q2: The guidance does not assume any improvement in the macro environment in the second half. - [Matt Calderone](CFO)

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