MBGL

Greetings, welcome to Mobility Global's Second Quarter 2026 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tejal Engman, Managing Director of Investor Relations. Thank you. You may go ahead.

Good morning, thank you for joining Mobility Global's Second Quarter 2026 Earnings Call. Presenting on today's call are Bill Eager, Chief Executive Officer, and Matt Calderone, Chief Financial Officer. The earnings release referenced in this call, as well as our quarterly earnings presentation and the associated quarterly report on Form 10-Q, can be found in the investor relations section of our website, mobilityglobal.com. The earnings release has also been attached to an 8-K that we furnished to the SEC. As set forth in more detail in today's earnings release, I will remind everyone that today's call may include forward-looking statements about Mobility Global's future performance, including those related to our full year 2026 guidance. Actual performance could differ materially from what is suggested by our comments today. Information about the factors that could affect future performance is contained in our recent SEC filings.

A reconciliation of reported and historic non-GAAP financial measures discussed on this call, including adjusted EBITDA, adjusted EBITDA margin, and free cash flow, is provided in our 8-K and in today's earnings presentation hosted in the investor relations section of our website, which again is mobilityglobal.com. We are not able to provide a reconciliation of forward-looking non-GAAP financial measures to the most recently comparable financial measures calculated and reported in accordance with GAAP, as we are unable to estimate significant non-recurring or unusual items without unreasonable effort. The amounts and timings of these items are uncertain and could be material to our results calculated in accordance with GAAP. With that, let me turn the call over to our CEO, Bill Eager.

Thanks, Tejal, and good morning, everyone. It's great to welcome you to Mobility Global's first earnings call. When I spoke with you at Investor Day, we were still part of S&P Global. Today, we are a standalone, publicly traded company. Over the past 12 months, our teams have worked tirelessly to make that possible, while also advancing our journey to bring together five previously separated businesses. I want to thank them for their dedication, their expertise, and extraordinary effort to help us achieve this complex milestone. Having spent the past 22 years with the company, I am proud of the exceptional assets, strong team, and distinctive capabilities we've built. They give me confidence in our opportunity and what we can deliver.

Today, I'll start with our Q2 results and key highlights from the quarter, update you on our early progress on the three strategic priorities I laid out at Investor Day, and share my focus areas for the second half of the year. Matt will then cover our financials in more depth, including our full year 2026 guidance and the key assumptions behind our outlook. Turning to our second quarter results, we delivered approximately 7% organic revenue growth modestly below our expectations. CARFAX subscription revenue growth was 8%. We delivered a 43% adjusted EBITDA margin as we operated our business with discipline and maintained strong profitability. Our second quarter results reflected a combination of factors. For CARFAX, while our vehicle history and listings businesses delivered solid growth, the changes we made to our go-to-market approach late last year did not deliver the full benefits we expected.

We're adjusting this approach and expect to see improvements going forward. Secondly, softer automotive activity outside the U.S. weighed on transactional revenue this quarter. The impact was concentrated in our B2B business and in CARFAX Canada, where volume-linked transactional revenue represents a larger share of the mix than the rest of CARFAX. Given our first half top-line performance, we are lowering our full year revenue guidance to 6.9%-7.7% growth for the year. We do not view these factors as a change in the underlying health of our business, and we expect to build momentum into 2027, supported by the strength of our subscription base that gives us high visibility revenue growth over time. We continue to execute our broader growth strategy, advancing key initiatives in product innovation and international expansion.

Matt will take you through the financial details shortly, but first, let me share with you a few highlights from the quarter, starting with two new CARFAX offerings that will add further value to our customers, Homegrown and Showroom. CARFAX Homegrown is a new solution that enables consumers to easily find pre-owned vehicles on a dealer's lot that were originally sold and then serviced at that dealership throughout its life, something consumers have long valued. Consumers value these vehicles more because that history signals consistent care, strong maintenance records, and greater confidence in the vehicle's condition. Until now, consumers and dealers haven't had a reliable way to identify these vehicles. CARFAX can. Because consumers trust the CARFAX brand and data, we are uniquely positioned to find these Homegrown vehicles, identify them, and surface that information to both the dealer and the consumer.

Consumers get vehicles they value, and dealers sell vehicles faster. Homegrown will be offered within the CARFAX Advantage program, and we expect it to increase the value of the program in a meaningful way. CARFAX Showroom, our first premium listings product, launched in the second quarter. This solution highlights a dealer's inventory in a shopper's search, driving more vehicle detail page views, and higher quality engagement while preserving the trust of the CARFAX consumer experience. Over time, we expect CARFAX Showroom to drive higher revenue per dealer. Turning to B2B. automotiveMastermind launched SMS offers, extending its service to sales functionality in one of the most valuable areas of the dealership, the service lane. Using our proprietary behavior prediction score, the solution identifies customers most likely to trade in their vehicle and sends them a personalized appraisal and upgrade offer while they are still at the dealership.

Instead of staffing the service lane to chase every opportunity, dealer teams can focus on customers who express interest. This makes the sales process more efficient and strengthens the value of the Mastermind platform, delivering additional value to existing customers while helping us win new ones. Turning to international expansion. We launched CARFAX Germany in early July, leveraging our strategic assets to enter Europe's largest automotive market. As our European data set continues to expand and coverage deepens, we are well-positioned to meet the growing consumer demand for trusted automotive information. With that context, let me turn to our three strategic priorities: creating One Mobility Global, deploying AI across our business, and strengthening our market position. Creating One Mobility Global is more than just a structural change.

It is a strategic opportunity to operate as one integrated company, connecting our capabilities, data, and customer relationships to capture the benefits of our scale and deliver greater value to our customers. We're about halfway through this multi-year effort and making good progress. By integrating our assets, we can generate new insights and solutions that weren't possible before, add value to our existing products, launch new ones, and expand into new markets globally. We are already seeing some early benefits. automotiveMastermind and CARFAX are building a joint product roadmap that leverages the combined data assets of both businesses to deliver greater value to our shared dealers. In Germany, we combined data and capabilities from across the company to create a compelling value from the outset in this attractive automotive market. There is more work ahead, but the path is clear.

We are focused on leveraging this integration to accelerate product innovation, expand into new markets, and drive stronger growth. Our second strategic priority is deploying AI across our business. AI is reshaping how companies operate. In our business, our proprietary decision-grade data is a core strategic asset. As AI generates more intelligence from our data, the value of our data only grows. It also unlocks new opportunities for product innovation and efficiency. We're deploying AI across the company and building central capabilities, including AI gateways and agentic platforms. Our centralized AI office provides the governance and consistency to strengthen our data estate and generate deeper insights across the business. This moves us beyond adopting tools to transforming our workflows and we're already seeing results.

From richer signals across our unique data estate to new predictive capabilities, new solutions like those we previewed on Investor Day, and faster, low-cost entry into new markets. We see significant runway to user AI to transform in how we operate, innovate, and grow. Turning to our third priority, strengthening our market position. As the automotive industry grows more complex, dealers, consumers, and industry partners need timely, trusted intelligence at more decision points. That need continues to drive our innovation and expansion. In Q2 and into July, we advanced this priority through CARFAX Homegrown, CARFAX Showroom, innovations at automotiveMastermind, and in our launch of CARFAX Germany. Together, these initiatives demonstrated our ability to move quickly, expand our reach, and bring new solutions to market. We have more to do, our focus is sustaining that momentum with disciplined execution and an effective go-to-market strategy.

Let me close with my two areas of focus in the second half. These are the items our leadership team is prioritizing as we continue to execute against our long-term strategy. The first is accelerating revenue growth. At CARFAX, we are ramping up new products and implementing our revised go-to-market approach. In B2B, we are moving fast PIQ and Data Studio products from launch to broader adoption. My second focus area is continuing to bring Mobility Global's business together. We are focused on winding down transition services with S&P Global, retiring duplicate systems, and moving to a common technology backbone. This is essential not only for efficiency, but also for bringing our data together on a modern AI native foundation that supports the combined business. Together, these efforts are building a more integrated, efficient platform for the long-term growth. To close, I am energized by the opportunity ahead.

Our combination of proprietary data, trusted brands, scaled customer network, and embeddedness give us a powerful, differentiated foundation for growth, which remains solid. We know where we need to improve, have adjusted our approach, and are acting with focus and urgency in making good progress. We have a clear path forward and strong conviction in our future. With that, I'll turn it over to Matt.

Thank you, Bill, and good morning, everyone. We appreciate you joining us today. I very much enjoyed meeting members of our analyst and investor community over the past few months. It's a privilege to tell the Mobility Global story and look forward to working with you in the months and years ahead. I want to cover two topics before diving into the details of our second quarter results and discussing our guidance and expectations for the full fiscal year. First, I want to remind you that the historical numbers we discussed today are not fully indicative of what our financial results would have been as a standalone public company, and therefore are not fully indicative of our financial performance on a go-forward basis. In its 8-K published on July 28th, S&P reported Mobility's results as a business segment consistent with its past practice.

In our 8-K this morning, we're reporting carve-out results for prior periods in a manner consistent with our Form 10 filings. However, as we described at our May Investor Day and in our 10-Q filed this morning, going forward, we expect our results as a standalone public company to differ from this presentation in certain areas. These areas include, but are not limited to, incremental costs associated with running a standalone public company, how costs are allocated across our business segments, interest expense from our inaugural bond offering, tax rate and cash taxes, and the one-time cost of standing up the infrastructure required to be a fully standalone public company. Over the course of my remarks, I'll highlight these differences and attempt to quantify and time phase them where possible. Second, I would like to cover my core takeaways for the quarter.

To start, we prepared for the successful July 1st spinoff of Mobility Global from S&P Global. This was an immense effort that is a critical milestone on our path to creating One Mobility Global. In the quarter, we delivered approximately 7% organic revenue growth, 8% growth in our CARFAX segment, and 4% growth in our B2B segment. As Bill noted, while we're confident in the underlying momentum in our business, our growth rates in the second quarter fell modestly short of our expectations. Our bottom line performance, adjusted EBITDA dollars and adjusted EBITDA margin, was strong as we managed costs effectively while continuing to invest in future growth. We launched Mobility Global with $186 million of cash on hand and continue to generate meaningful cash flow. Today, we are announcing our first quarterly dividend.

Finally, we are providing guidance for our full fiscal year 2026, which reflects our first half results, our forecast for the second half, and the impact of becoming a standalone public company. Turning to our second quarter results. Mobility Global revenue in the second quarter was $468 million, a 7% increase over the prior year period. All this revenue was organic. At the Mobility Global level, subscription revenue grew 7% year-over-year, reflecting the durable strength of our brand and the value of our solution. Transactional revenue grew 5%, largely due to challenging macro conditions that particularly affected our business outside the U.S. For the first half, revenue grew 7.4%. Including the impact of FX, we grew approximately 6.8%. This reflects a roughly $5 million currency benefit in the first half, approximately $4 million of which came in the first quarter. Performance varied across our two business segments.

Our CARFAX segment grew 8% in the quarter, with subscription-based revenue up approximately 8% year-over-year. This is broadly in line with subscription revenue growth in Q1. CARFAX transactional revenue grew approximately 9% year-over-year, down slightly from 10% growth in the first quarter. CARFAX growth was broad-based across almost all major product lines in the U.S. and abroad. In the U.S., we saw comparatively stronger year-over-year performance in our service loyalty and consumer products. As Bill noted, a few quarters ago, we shifted our go-to-market approach to emphasize the value of employing all three of CARFAX's core products together: Advantage, Listings, and Service Loyalty. While we still believe in this value, our go-to-market approach did not deliver what we expected. We're making changes and expecting to see improvements in the second half.

Internationally, our CARFAX Canada business again produced strong subscription growth but experienced continued softness in its transactional product lines due to recent softness in auto transactions. In Europe, we saw strong double-digit growth, but our transactional revenue in the quarter lagged expectations. We continue to adapt our strategy and sales approach as we learn in different countries, and we're excited about our launch in Germany. Overall, we see momentum building on our CARFAX business and are doubling down on execution in the back half of the year. Our B2B segment grew 4% in the second quarter, a decline from 8% year-over-year growth in Q1. Subscription revenue grew approximately 6% year-over-year, while transactional revenue declined by 4%.

Within B2B, growth was relatively stronger in our Sales Solutions business, which was anchored by solid performance in automotiveMastermind, but was impacted by approximately $1 million in recall revenue that was pushed to the second half of the year, as it is dependent on a final quote. Our B2B business also saw some modest delays in Planning Solutions projects due to the uncertain macroeconomic environment and faced challenging comps overall in Q2 due to relative strength in the prior year quarter. Turning now to profitability. During the second quarter, we delivered $202 million in adjusted EBITDA, an approximately 7% increase from the prior year quarter. This resulted in an adjusted EBITDA margin of 43.2%, approximately 40 basis points higher than the prior year period.

For the first half, we delivered $386 million in adjusted EBITDA, an 8% increase over the prior year at a margin of 42%, which is an approximately 20 basis point improvement over the first half of 2025. I am pleased with how we are gaining operating scale and managing our cost base in a dynamic year. This has allowed us to simultaneously pivot spend to fund investment in future growth while maintaining margins and delivering on the bottom line. Looking forward, we expect adjusted EBITDA margins to decline in the second half of the year for two reasons. First, while we manage the business on a full year basis, our margins are typically stronger in the first half. The preponderance of our pricing actions take effect early in the year, while our renewal cycles and our advertising and investment spend are weighted towards the back half.

Second, as a standalone public company, we will bear incremental corporate expenses compared to our historic cost allocations from S&P. We are making real progress in building towards a modern, scalable corporate infrastructure that will ultimately be a platform for growth. We expect that on a run rate basis, the discrete impact of this on incremental corporate expenses will roughly equate to reducing full year margins by approximately 150 basis points relative to our fiscal year 2025 baseline. This equates to the high end of the $20 million-$25 million range we disclosed at our Investor Day. Given timing, we anticipate the discrete impact to 2026 margins will be approximately half this level, but we are mitigating this somewhat through scale and operating efficiency. Both these factors are reflected in our 2026 guidance, the impact of seasonality and of incremental corporate expense.

Moving down the P&L, our reported results this quarter include a significant amount of one-time costs related to separation from SPGI. GAAP net income for the quarter was $53 million, down 18% year-over-year. However, this included $36 million of one-time transaction-related costs, compared to only $2 million of transaction costs in the second quarter last year. Looking forward, as a standalone company, we expect our tax rate to decrease as we take actions to optimize the legal entity structure that we inherited from S&P Global. Conversely, we expect our interest expense to increase as we begin to service our bond issuance. I will cover our expectations for 2026 tax rate and interest rate in the guidance section. Please note that beginning next quarter, we intend to also report adjusted net income and adjusted diluted earnings per share to provide investors additional insight into the underlying performance of our business.

I will now move to the balance sheet. We are launching Mobility Global with a strong balance sheet that provides us both strategic flexibility and the capacity to deliver consistent incremental shareholder value. We ended the second quarter with $186 million of cash on hand, net debt of $1.8 billion, and a net leverage ratio of 2.4 times adjusted EBITDA for the trailing 12 months. Looking forward, I want to highlight four items that will impact our cash flow. First, we expect to incur approximately $100 million in one-time cash costs associated with completing the spin-off and stand-up of Mobility Global, with approximately half of this incurred in 2026. At this point, we expect that roughly 50% of these one-time costs will be capitalized. Second, we will incur incremental interest expense from our $2 billion in bonds.

Third, as previously disclosed, for the next 12 years, cash taxes will be approximately $89 million higher than our tax provision. This is due to the disallowance of a portion of amortization of intangible assets related to the IHS Markit acquisition, as reflected in our deferred tax liability. Lastly, our cash taxes will increase as we will now be responsible for federal tax payments previously made by SPGI. Turning now to capital deployment. Our immediate priority is to fund one-time transaction-related costs and initiate a quarterly dividend to return cash to shareholders.

Today, we're pleased to announce that our board of directors has approved a quarterly dividend of $0.06 per share, which will be payable on September 10th to stockholders of record as of the August 27th close. We set this dividend based on an estimate of normalized go-forward net income by adding back one-time separation costs and adjusting for our estimated standalone interest and tax profile. Looking forward, at this point, we intend to maintain our inherited dividend aristocrat status from SPGI. We also continue to expect that we will not commence share repurchases until early 2027, and that we will not pursue any material M&A until we are fully separated from SPGI. Finally, please turn to slide 9 for Mobility Global's outlook.

Our full year 2026 guidance reflects the sum of our carve-out results for the first six months of the fiscal year and our standalone results for the second six months of this year. Given the timing and nature of our spin-off, for the remainder of 2026, we are providing guidance only for revenue and adjusted EBITDA at the Mobility Global level. To support your financial modeling, however, I will provide estimates for certain additional financial metrics. We anticipate guiding to a broader set of financial metrics for our full fiscal year 2027. We now expect to deliver revenue between $1.87 billion and $1.885 billion for our full fiscal year 2026, for year-over-year growth of 6.9%-7.7%. As we are assuming no incremental currency impact in the second half, our revenue guidance implies a modest sequential improvement in our constant currency growth rate versus the first half.

We now expect adjusted EBITDA to be between $745 million and $760 million. This implies an adjusted EBITDA margin of approximately 40% at the midpoint. Our adjusted EBITDA margin guidance incorporates our modest first half margin improvement, typical quarterly spend patterns, and the part-year impact of incremental standalone corporate infrastructure. Please note that for the next four quarters, we anticipate the potential for slightly more quarter-to-quarter margin volatility than we've seen historically, given the dynamic nature of this stand-up period. From a cash flow perspective, we anticipate spending roughly half of the $100 million one-time cost associated with completing the spin-off in the remainder of 2026. We anticipate interest expense to be approximately $55 million in the second half. On a cash basis, we expect to make our first interest payment of $60 million in Q4, which includes the first half accrual.

We anticipate our GAAP tax rate to be in the 28%-30.5% for the full fiscal year. Finally, we anticipate our average share count to be between 295 million and 297 million shares. In closing, I want to reiterate my takeaways for the quarter. We accomplished a great deal in the quarter, both operationally and in the market. Our growth continued to compound, particularly in the CARFAX segment, but not to the extent we anticipated. Our bottom line performance was strong. We're focused on execution and building momentum towards 2027, and we provided guidance for the full fiscal year. [Decko Bill], we're partway through a multi-year journey to not just create an integrated Mobility Global, but to build a business platform that will deliver exceptional compounding value to our customers, employees, partners, and shareholders.

There's significant work ahead of us, but we're confident in both the destination and in our ability to get there. With that, operator, please open the line for questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Scott Wurtzel with Wolfe Research. Please proceed with your question.

Hi. Good morning, guys. Thank you for taking my questions. 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. Thanks.

Sure. Thanks, Scott. We mentioned the CARFAX go to market. Late last year, we shifted our go-to-market approach at CARFAX. Really, the shift was to go from selling our core three products à la carte, to selling them together in a package, our lifetime dealer package. Containing our CARFAX Advantage listings and service loyalty products. As I mentioned at Investor Day, one of the effects we saw early in this process was it tended to lengthen the sales cycle a little bit. Early on, the adoption of it was right in the ranges that we expected. Over the last quarter or so, we started to see those lengthening sales cycles affect our sales rate on the product.

The shift that we're making really is while we still believe heavily in the package, we're recalibrating that sales approach, recalibrating our sales incentive, and shifting back to where we are selling each of those products individually, and allowing dealers to get to that lifetime program at their own pace by adding product by product, as opposed to adding all of the products at the same time. We've adjusted the incentive for our sales folks and really gone to an approach where we are selling the products individually, and allowing dealers to get to the lifetime program at their own pace.

Got it. That's helpful. 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. Thanks.

Yeah. I'll start again, Bill, I'm sure you want to chime in. This is Matt. Nice to meet you, Scott. Look, I think just to echo what Bill said in his remarks, we had a good first half. It wasn't quite as good as we thought. In a subscription-based business, it tends to be sticky on both sides a little bit, right? So implicit in the midpoint of our guide is modest improvement, particularly stripping out the impacts of FX in the first half. I think improvement on a sequential basis were more consistent last year. I think, a slower build than perhaps we planned over the course of the year, but still building momentum into 2027. Yeah, I think you'll see more of that build in the second half in CARFAX than in B2B.

B2B's numbers, if you think about Q1 to Q2, that was perhaps more impacted by FX and a strong comp than other parts of the business. B2B has actually been executing that relatively flat, and we anticipate sort of more flat, first half, second half, Scott. Look, there's underlying momentum in the business, for all the reasons that Bill described. It's just going to take us a little longer than we thought to get to where we want to be. Bill, I'm sure you want to chime in.

Scott, stepping back a little bit. What I would say is this, is that an enormous amount of work went into our spin. The conviction we have in the strategic rationale for the spin just continues to grow as we do that work. We're connecting the data across the five businesses of Mobility Global. We're working on getting off the TSAs with S&P. I'm encouraged by our subscription revenue growth and the strength of that over the first half of the year at 8%. With everything we had going on, getting out of S&P and becoming a standalone public company, our innovation engine and bringing new products to market and launching new markets continued. I look back at Q2, we launched two major products at CARFAX U.S. in CARFAX Homegrown and CARFAX Showroom, both being received extremely well by the dealer community and consumers.

We launched our SMS offers at automotiveMastermind in Q2, which is really allowing our current customer base really to take advantage of that service to sales motion. Then, last but certainly not least, in early July, we were able to launch CARFAX Germany, Europe's largest automotive market, significantly ahead of schedule. We're really excited about the fact that we're launching new things into the market right now that will be driving that 2027, 2028 growth. Then, while that's going on, we've started returning capital to shareholders. Matt talked about that, we'll talk about it a little bit more. As we think about the midterm targets that we put out, we still have strong confidence in that with the 7.5%-10% and 50 basis points of margin expansion. We're feeling very good about what we laid out at Investor Day. Thank you for the question.

Great. Thanks, guys.

Our next question comes from Craig Huber with Huber Research Partners. Please proceed with your question.

Great. Thank you. When you had your Investor Day a few months ago, I thought one of the most interesting things you guys talked about was that you wanted to integrate your database together with the B2B side versus the CARFAX side. Frankly, I was surprised that wasn't done already underneath S&P Global or underneath IHS Markit, but that's water under the bridge now. Can you just go through for us real quick, A, how long that's going to take? What kind of cost that might be? That's in your numbers, I assume. I think you've talked about that. What the major benefits are? Not real long here, but just what's the highlights here about how that's going to benefit you guys going forward here?

Yeah.

I have two other questions. Thank you.

Sure, Craig. What I would say is, one of the things I mentioned I was really proud of the team and the way that we've gone through this process. We really started the journey 14 months ago of setting up our business as a standalone public company. The teams and the data operations teams and our tech teams have gone through this process, not just building so that we could function on day one. Really setting us up for the next 5-10 years and are doing the activities that we need to do in order to build that foundation for bringing those five businesses together and leveraging it. I would say that we've made a ton of progress on that front. We continue to make more. I can give you just a couple of examples.

In the past, the CARFAX business built their product plans. The automotiveMastermind team built their product plans. Those teams have come together and have joint product plans that they've built where we will be really cross-sharing information and really serving, especially our joint dealers between those two businesses, information on the Mastermind side and information on the CARFAX side to really drive more effective products, both at CARFAX and Mastermind for those dealers. Another good example, as I mentioned, we launched Germany. We recently in the last year launched Italy as well. When I think of building our data platform in Europe for ingesting the data as well as creating the insights, that three years ago, four years ago, would've been done at those respective countries through CARFAX Europe.

Today we're leveraging the CARFAX U.S. ingestion and insights platform to, one, move faster, but get a lot more out of the data coming in. We're already realizing the benefits of it, but it's a multi-year journey. I look at it as we're seeing really strong benefits today, but we have line of sight into more benefits coming online over the next year or two.

You think roughly about two years from now it'll be complete?

Yeah. That's about what I would say. Yeah, I think that's a reasonable assumption.

Okay. My unrelated question is, with all this renewed turmoil over in the Middle East, do you feel that that has impacted any of your businesses? If so, which ones? We have obviously seen it with some other companies getting impacted by that, I would like to hear your thoughts on that in your businesses.

Yeah, I'll start. I think we've seen it on the margins, right? Maybe we talked about this in the prepared remarks, Ian, you look at the numbers, right? What was affected, our transactional business and particularly transactional business internationally, right? Canadian auto market's been tough. Our planning business felt the impact. You see that in the numbers in sort of B2B, both transactional and international numbers for the quarter. I wouldn't say it's a significant driver. On the margins, it certainly had an impact.

My other question, obviously, you guys spent a heck of a lot of time here helping to put together the whole spin with the separation of company from S&P and stuff. It took a lot of executives' time to get that done. Just curious, do you think that impacted at all your operations here versus how you were thinking things were going to go, say, a few months ago?

Craig, the thing I would say is this. Of course. If you're taking on something as large as that, we'd be naive to say it didn't have an impact at all. The reality is, a bit like your previous question, the CARFAX U.S. business is one of the growth engines of this business. We tried something towards the end of last year and in the beginning of this year. It worked, but not as well as we thought. If it would've worked the way that we thought, I think that in spite of all the things going on, we would've been where we wanted to be.

We have Scott and the team, and as a leadership team, a focus coming out of Q2 to say, let's get that go to market right and let's continue to figure out areas where we can execute better. I feel like the getting our performance to where we want it to be, in spite of all those things going on, is in our control. I think that I'm happy to see the team trying things like that. I'm happy to see them learning from it and pivoting. I'm confident that we'll make the right adjustments and we'll get it back on track and where it needs to be. I think that has more to do with how we're executing and going to market than anything else.

Great. That's all I had. Thank you.

Thank you. We ask that each analyst limit themselves to one question and a follow-up so that others have an opportunity to do so. Our next question is from Jeff Meuler with Baird. Please proceed with your question.

Yeah, thank you. For CARFAX U.S., 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 Service Loyalty? I'd imagine Advantage is pretty high. Listings, you have a lot of revenue. It's less clear to me where Service Loyalty stands. It'd be helpful to know where things stand relative to opportunity.

Sure. We haven't given exact numbers on each of those products. I'm happy to talk to you about kind of how we view the three products and the opportunity that exists within each. On our Advantage program, which is our base program, we continue to add value to that program. We think we have the opportunity to add more dealers to that program. We're highly pinned in the franchise dealer space, but we have a lot of opportunity in the independent dealer space. Think that product has the ability to be a steady growth product for us for the next five years. On our Listings product, we have a lot of green fields in front of us. Of the four players in that space, we're the newest of the four.

We've had nice steady growth since we launched that product 12, 13 years ago, and feel like we can continue to do that. We just launched our premium product this quarter. That's our first premium product on our Listings site. Last but not least, our CARFAX Loyalty Program. I would say that, if I think of the franchise dealers we have on Advantage right now, less than half of them are on that product. The ones that are seeing a great ROI. We just see nothing but good growth coming out of that as we continue to grow that product.

Yeah, I Jeff would say-

Thank you.

-the average dealer has between one and a half and two products. You have to have Advantage. I think to give you a sense of the order of magnitude behind the relative penetration of the three.

Yeah. Thank you. I was just trying to kind of understand the go-to-market changes that are happening and maybe some reason behind them. On B2B subscription, I know you gave us more historical data today, but 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 tough comp. Just can you just walk through what's going on there and anything from comps, anniversarying, acquisition contribution, and then underlying trends?

If you think about comparing Q2 on a year-over-year basis, there are two factors, right? One is FX, right? The other is we had a particularly strong Q2 last year in our Sales Solutions business, which makes the numbers look a little wonky. On a sequential basis, it's much more stable. There's nothing really on an underlying basis going on Q1 to Q2 in the B2B space. It came out certainly on the subscription side, roughly in line with what we anticipated. That said, we need to improve it. I think that is an area of focus for Joe and Aaron, Kristen, and the team, is to continue to drive up the underlying growth rate from whatever it was, 6% in the first half to the high single digits. It's got some work to do.

I wouldn't read too much into the Q1 to Q2 numbers this year. As I said, those are really more affected by a tough comp from last year and the impact of FX.

Thank you.

Our next question comes from Ashish Sabadra with RBC Capital Markets. Please proceed with your question.

Hey, good morning, guys. This is Will Qi on for Ashish Sabadra. Appreciate you guys taking our question. Really great to hear kind of the updates on the One Mobility program with kind of combining data sets, the automotiveMastermind collaboration. Now that you're on the halfway mark there, what's kind of the next big opportunities that you see in the pipeline? How should we think about as pace of synergies start to flow through? Thanks.

Sure. If you think about it, I mentioned that Mastermind, CARFAX. The place that we see the most immediate opportunity is we mentioned the 53 million Car Care users at CARFAX, and automotiveMastermind having 3,200 dealers that they're helping generate new car offers for. We see the opportunity to take the offers for those 3,200 dealers and activate them in our Car Care platform. There's a ton of overlap between those 53 million Car Care users and the dealer customers that automotiveMastermind is putting customized, unique offers to. As the team met, they feel like that's low-hanging fruit that we can go after that will immediately have impact on both the value that we deliver in the Car Care product as well as the effectiveness of the campaigns that Mastermind is running for those dealers. The other place that we're seeing opportunity is in international expansion.

As we're bringing the assets and processes and strength of the company coming together to new markets like Germany, Italy, Spain, we are able to ramp significantly quicker than we would have, say, three years ago. Building out partner networks, building out dealer networks, establishing the brand, getting the product to a really valuable place for consumers in those markets where demand for a strong vehicle history product is high. We feel like we're able to step in and establish our leadership position in those markets. We're optimistic on. We had mentioned three growth vectors at Investor Day. One was enhancing our current products and adding value to them, allowing us to take price and add new customers. We're seeing that come to fruition.

The second is launching new products, we saw that in Q2, we'll continue to see that in the second half. The third was launching new markets and expanding our footprint. I'm really excited and happy to see that we're accelerating that schedule and moving markets like Germany up from our original launch day expectation. Thank you.

Got it. Thank you. 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, how that kind of feeds in, maybe what considerations are for the high end versus low end. Are you kind of assuming a continuation of trends that you're seeing right now?

Yeah. We're not assuming any improvement in the macro in the back half.

Got it. Thank you very much.

That's the foundational.

Our next question comes from Toni Kaplan with Morgan Stanley. Please proceed with your question.

Thanks so much. You've talked about recalibrating the go-to-market approach, I wasn't sure on when you started to make those changes, but I was wondering if you're already starting to see improvement there. I was wondering also if that was what was sort of embedded in the point that you made on the guidance slide, that revenue implies a sequential improvement in the back half. Just is that what's driving the improvement or are there other factors, and do you think that the rev guide is now de-risked and how confident are you? Thanks.

Yeah. I'll start, Toni. I think we made that pivot in June. Feel comfortable with sort of early momentum in that space. That's part of why there's going to be sequential improvement in the back half. Part of it is the new products we launched that Bill described. Part of it is just our overall view of where the business is. Yeah, I think we feel comfortable with the guide. It does imply, excluding FX, improvement from the first half, second half. Sequential growth inconsistent with last year. Again, it's sort of bounded from a risk perspective. We're not assuming, as I said to the previous caller, any material improvement in the macro situation.

Yeah.

Okay. For my follow-up, you've gotten this question a number of times in the past, but I was hoping you could talk about how your value proposition changes for an autonomous vehicle manufacturer. Just putting aside that it's a very small part of the market now and could take a lot of time before it becomes more meaningful. I guess, are there services that you offer AV manufacturers, and do you have customers right now that are focused sort of exclusively on AV? Thanks.

Sure. The answer to that is yes. If you think of things like our global forecast, they involve every type of vehicle being manufactured anywhere in the world. We say that we do business with 40 of the top 40 manufacturers globally. They are all trying to figure out how the vehicles they're manufacturing fit into that global market. When I think of tools like FAST that we're releasing now, giving them the capability of running many scenarios, as they decide how many vehicles they're going to manufacture, what markets they're going to introduce those vehicles in, how their actions will impact the market, how others putting different assumptions in, so on and so forth.

I think that when you think of the market evolving over time, you had mentioned it might be a small portion today, but we really want to plan for not just today, but for tomorrow. We want to be there, and we want to be providing them with the information they need to be making the decisions that impact their next 5-10 years. We provide that today, but that type of data and that type of information is important for all 40 of those OEMs as they plan their product set. Yes, we definitely do business with those manufacturers and the information is critical to them and it's also critical to the OEMs that are not delivering that type of product right now.

Thank you.

Our next question comes from Manav Patnaik with Barclays. Please proceed with your question.

Hi. Good morning. It's Wahid Amin on for Manav. On the revised guidance, since you're not assuming any macro improvement and B2B is expected to be pretty stable, are you saying the main variable that'll get you to your guidance range, especially the high end, is the pace of improvement in CARFAX? Or are there other items that can influence where you land?

Yeah. I think we talked about how sequentially, first half to second half, more of the growth ex FX will come from CARFAX. We gave a reasonably narrow range, right? Transaction will have an impact, FX will have an impact, as well as how quickly we build. We do see momentum in the business. We're building. We're building not just for the back half of this year into 2027, but all those factors are incorporated.

On the comment made about fewer than half of the franchise Advantage dealers using Service Loyalty, despite it having a strong ROI, what's been historically the limited adoption, and does returning to different sales motion make that opportunity easier to capture?

Yes. What I would say is this, is that when I look at how many franchise dealers use our Advantage product, we're highly pinned. If you look in our space, most folks that deliver services to dealers would love to have half the franchise dealers in the country using their products. I would say that the Service Loyalty product is a longer-term product for the dealer, where they're building over time. With us, I'm seeing more and more dealers focused on that Service Loyalty piece of their business. A number of questions on our go-to-market at CARFAX. One of the reasons that sales cycle is longer is that when we're selling our Listings product, that generally is a product that a sales manager or a general manager of the dealership is signing up for.

Whereas our Service Loyalty product is one where the service leadership, the service manager, and the dealership is signing up for it. You're, in essence, getting two yeses in order to put those products in versus selling them à la carte, where you need to get to one yes. I think that what we've seen, though, in our Service Loyalty product is once we have it installed and it's being used at the dealership, it tends to have a very high retention rate because of the ROI. It's one that we can go in and work with the dealer so they can see just how many people are coming back to their service lanes based on the CARFAX reminding them to do so. It's a product we have a lot of confidence in as we move forward, and it will become a bigger and bigger part of our offering.

Thank you.

Our next question comes from Keegan Anaco with Wells Fargo. Please proceed with your question.

Hey, good morning. This is Keegan Anaco in for Jason Haas. Can you just describe the moat around your B2B business and particularly the Polk database? I understand that some of this data can be purchased, but I think you might have privileged economics to get the entire data set. Can you just describe why nobody else is able to get this data at the same breadth and depth that you're able to? Thanks.

Yeah. Almost think about it in two ways. One way is where the database sits today as we're adding more and more data to it. I think we're fortunate in our unique position in the industry to be able to capture a lot of data from different connection points that we have because of that position. The second piece is the longitudinal nature of that data. A lot of the questions that people have and want answered and insights that are derived are not just derived from the current information, but the trends over the last 10, 15 years, 20 years. When you look at a lot of that data, some of that data that's seven years old, 12 years old, 15 years old just doesn't exist anymore anywhere else.

That advantage that we have of having the past 20 years and all those connection points elevates the quality of our data and in turn, the quality of the insights because of the depth of that data.

Got it. Thank you.

Our next question comes from Rajiv Bhatia with Morningstar. Please proceed with your question.

Good morning. Pleasure to join the call. I have a big picture question on the Listings business. Since launching it in 2014, it's clearly become an important contributor for you guys. As CARFAX has expanded further into listings, how do you think about the potential channel conflict with marketplace customers, particularly given that some marketplaces have switched to Experian AutoCheck? I guess more broadly, how do you balance the growth opportunity in listings against the risk of creating a greater opening for competitors such as AutoCheck? Then I have one follow-up.

Sure. The way I think of that, I'll just talk about competition in general. If you think of where we sit and the power and uniqueness of our core assets, whether that's our brands, data, customer relationships, we have great confidence in those. I think that our space has always been a competitive market. From time we see different pockets of increased competition. For us, we've always been hyper-focused on the consumer and the needs of the consumer, and making sure that we're delivering a product that is the best possible product that consumer could have. We look at where the consumer is getting that report. The number one place consumers get their reports are from the dealer, whether it's physically at the dealership or from the dealer's website in the form of a digital report.

We kind of look at that situation as one where carfax.com and the dealer's websites benefit from having the best product in the marketplace. We're good with that arrangement in that situation.

Got it. That's helpful. As my follow-up, I wanted to drill down on advertising spend, which was about 10% of the company's expense base in 2025, increased somewhat in recent years and sounds like it will increase in the back half of 2026. I guess, what was advertising expense in the quarter, and how should we think about advertising as a percentage of revenue over the next few years? I assume the advertising spend is pretty much all CARFAX, but are certain parts of CARFAX, such as listings, more advertising intensive? I just want to get a sense as to how you're managing the potential for rising customer acquisition costs.

Yeah, I'll take that one. We are spending modestly more on ad and promo, that's a good thing, right? I think the fact that we've been able to generate real scale and operating leverage out of the business has allowed us not just to drive margins up, but to fund proportionally more investment. We're constantly working, not just broadly, but certainly in our Listings business from a traffic perspective, to optimize that spend. We've been very efficient in doing so. We view that as an investment in the business. Not making any predictions on where we're headed, but I think we'd like to spend more, and we'd like to spend more because we're getting more efficient in other parts of the business. We think the next wave of efficiency is there using AI, particularly once we make a little more progress in building One Mobility Global. Off we go.

We have reached the end of our question and answer session now. I would like to turn the floor back over to Bill Eager for closing comments.

Thank you. Thank you everyone for joining us today. We look forward to speaking with you at conferences this fall. Have a great day, everyone.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.