##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 000-51653
 DealerTrack Holdings, Inc.
 (Exact name of Registrant as specified in its charter)
 Delaware
    
    52-2336218(State or other jurisdiction of incorporation or
    
    (I.R.S. Employer Identification Number)organization)1111 Marcus Ave., Suite M04
    
    11042Lake Success, NY
    
    (Zip Code)(Address of principal executive offices)
 (516) 734-3600
 þ o
  o þ o
 o þ




---



##### 



DEALERTRACK HOLDINGS, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2007
 TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATION
    
    
    1Item 1. Financial Statements
    
    
    1Consolidated Balance Sheets (unaudited)
    
    
    1Consolidated Statements of Operations (unaudited)
    
    
    2Consolidated Statements of Cash Flows (unaudited)
    
    
    3Notes to Consolidated Financial Statements (unaudited)
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    18Item 4. Controls and Procedures
    
    
    19PART II. OTHER INFORMATION
    
    
    20Item 1. Legal Proceedings
    
    
    20Item 1A. Risk Factors
    
    
    20Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    20Item 6. Exhibits
    
    
    20SignatureEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONSEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONS




---



##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 DEALERTRACK HOLDINGS, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (unaudited)
 March 31,
    
    
    December 31,2007
    
    
    2006(In thousands, except shareand per share amounts)ASSETSCurrent assetsCash and cash equivalents
    
    $
    33,035
    
    
    $
    47,080Short-term investments
    
    
    106,360
    
    
    
    124,115Accounts receivable  related party
    
    
    369
    
    
    
    398Accounts receivable, net of allowances of $3,794 and
$4,407 at March 31, 2007 and December 31, 2006,
respectively
    
    
    22,915
    
    
    
    19,560Prepaid expenses and other current assets
    
    
    4,633
    
    
    
    4,694Deferred tax assets
    
    
    2,706
    
    
    
    2,483Total current assets
    
    
    170,018
    
    
    
    198,330Property and equipment, net
    
    
    8,107
    
    
    
    6,157Software and web site developments costs, net
    
    
    9,603
    
    
    
    10,048Intangible assets, net
    
    
    56,273
    
    
    
    37,918Goodwill
    
    
    71,898
    
    
    
    52,499Restricted cash
    
    
    540
    
    
    
    540Deferred taxes and other long-term assets
    
    
    17,874
    
    
    
    16,021Total assets
    
    $
    334,313
    
    
    $
    321,513LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable
    
    $
    1,979
    
    
    $
    1,818Accrued compensation and benefits
    
    
    4,732
    
    
    
    10,111Accrued other
    
    
    14,760
    
    
    
    11,978Deferred revenue
    
    
    4,085
    
    
    
    3,166Due to acquirees
    
    
    2,202
    
    
    
    2,440Total current liabilities
    
    
    27,758
    
    
    
    29,513Due to acquirees  long-term
    
    
    3,032
    
    
    
    2,982Deferred taxes and other long-term liabilities
    
    
    9,002
    
    
    
    4,681Total liabilities
    
    
    39,792
    
    
    
    37,176Commitments and contingencies (Note 14)Stockholders equityPreferred stock, $0.01 par value; 10,000,000 shares
authorized and no shares issued and outstanding at March
31, 2007 and December 31, 2006, respectively
    
    
    
    
    
    
    Common stock, $0.01 par value; 175,000,000 shares
authorized; 39,630,458 and 39,627,825 shares issued and
outstanding at March 31, 2007, respectively and 39,358,769 and 39,357,550 shares issued and outstanding
at December 31, 2006, respectively
    
    
    396
    
    
    
    393Treasury stock, at cost, 2,633 and 1,219 shares at March
31, 2007 and December 31, 2006, respectively.
    
    
    (72
    )
    
    
    (31
    )Additional paid-in capital
    
    
    293,590
    
    
    
    289,490Deferred stock-based compensation (APB 25)
    
    
    (3,756
    )
    
    
    (4,322
    )Accumulated other comprehensive income (foreign currency)
    
    
    768
    
    
    
    37Retained earnings (accumulated deficit)
    
    
    3,595
    
    
    
    (1,230
    )Total stockholders equity
    
    
    294,521
    
    
    
    284,337Total liabilities and stockholders equity
    
    $
    334,313
    
    
    $
    321,513
  1




---



##### Table of Contents



DEALERTRACK HOLDINGS, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (unaudited)
 Three Months Ended March 31,2007
    
    
    2006(In thousands, except share and per shareamounts)RevenueNet revenue (1)
    
    $
    51,725
    
    
    $
    37,935Operating costs and expensesCost of revenue (2)
    
    
    21,300
    
    
    
    15,119Product development (2)
    
    
    2,380
    
    
    
    2,202Selling, general and administrative (2)
    
    
    21,248
    
    
    
    15,969Total operating costs and expenses
    
    
    44,928
    
    
    
    33,290Income from operations
    
    
    6,797
    
    
    
    4,645Interest income
    
    
    1,531
    
    
    
    963Interest expense
    
    
    (62
    )
    
    
    (72
    )Income before provision for income taxes
    
    
    8,266
    
    
    
    5,536Provision for income taxes, net
    
    
    (3,441
    )
    
    
    (2,100
    )Net income
    
    $
    4,825
    
    
    $
    3,436Basic net income per share
    
    $
    0.12
    
    
    $
    0.10Diluted net income per share
    
    $
    0.12
    
    
    $
    0.09Weighted average shares outstanding
    
    
    38,625,215
    
    
    
    35,268,289Weighted average shares outstanding assuming dilution
    
    
    40,231,194
    
    
    
    36,718,023
 
 (1)
    
    Related party revenue for the three months ended
March 31, 2007 and 2006 was as follows: Three Months EndedMarch 31,2007
    
    2006(In thousands)Related party revenue
    
    $
    620
    
    
    $
    9,252
  Three Months Ended March 31,2007
    
    2006(In thousands)Cost of revenue
    
    $
    414
    
    
    $
    253Product development
    
    
    136
    
    
    
    78Selling, general and administrative
    
    
    1,579
    
    
    
    893
  2




---



##### Table of Contents



DEALERTRACK HOLDINGS, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited)
 Three Months EndedMarch 31,2007
    
    
    2006(In thousands)Cash flows from operating activitiesNet income
    
    $
    4,825
    
    
    $
    3,436Adjustments to reconcile net income to net cash provided by operating activitiesDepreciation and amortization
    
    
    7,846
    
    
    
    6,070Deferred tax benefit
    
    
    (2,075
    )
    
    
    (1,341
    )Amortization of stock-based compensation
    
    
    2,129
    
    
    
    1,224Provision for doubtful accounts and sales credits
    
    
    1,008
    
    
    
    975Loss on sale of property and equipment
    
    
    15
    
    
    
    Amortization of deferred interest
    
    
    42
    
    
    
    46Deferred compensation
    
    
    70
    
    
    
    33Amortization of bank financing costs
    
    
    30
    
    
    
    33Stock-based compensation windfall tax benefit
    
    
    (1,141
    )
    
    
    (464
    )Changes in operating assets and liabilities, net of effects of acquisitionsTrade accounts receivable
    
    
    (3,175
    )
    
    
    (14
    )Accounts receivable  related party
    
    
    29
    
    
    
    (381
    )Prepaid expenses and other current assets
    
    
    612
    
    
    
    194Accounts payable and accrued expenses
    
    
    (5,760
    )
    
    
    (5,586
    )Accounts payable  related party
    
    
    
    
    
    
    (1,033
    )Deferred revenue and other current liabilities
    
    
    921
    
    
    
    860Other long-term liabilities
    
    
    21
    
    
    
    275Deferred rent
    
    
    77
    
    
    
    163Other assets
    
    
    (16
    )
    
    
    (2
    )Net cash provided by operating activities
    
    
    5,458
    
    
    
    4,488Cash flows from investing activitiesCapital expenditures
    
    
    (811
    )
    
    
    (923
    )Funds released from escrow and other restricted cash
    
    
    
    
    
    
    50Purchase of short term investments
    
    
    (58,050
    )
    
    
    (64,358
    )Sale of short term investments
    
    
    75,805
    
    
    
    4,750Capitalized software and web site development costs
    
    
    (957
    )
    
    
    (1,151
    )Payment for net assets acquired, net of acquired cash
    
    
    (37,832
    )
    
    
    (6,180
    )Net cash used in investing activities
    
    
    (21,845
    )
    
    
    (67,812
    )Cash flows from financing activitiesPrincipal payments on capital lease obligations
    
    
    (105
    )
    
    
    (119
    )Proceeds from the exercise of employee stock options
    
    
    833
    
    
    
    321Proceeds from employee stock purchase plan
    
    
    430
    
    
    
    143Purchase of treasury stock
    
    
    (41
    )
    
    
    Principal payments on notes payable
    
    
    
    
    
    
    (211
    )Stock-based compensation windfall tax benefit
    
    
    1,141
    
    
    
    464Other
    
    
    (1
    )
    
    
    13Net cash provided by financing activities
    
    
    2,257
    
    
    
    611
 3




---



##### Table of Contents



Three Months EndedMarch 31,2007
    
    
    2006(In thousands)Net decrease in cash and cash equivalents
    
    
    (14,130
    )
    
    
    (62,713
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    85
    
    
    
    (10
    )Cash beginning of period
    
    
    47,080
    
    
    
    103,264Cash end of period
    
    $
    33,035
    
    
    $
    40,541Supplemental disclosureCash paid for:Income taxes
    
    $
    3,356
    
    
    $
    1,103Interest
    
    
    21
    
    
    
    13Non-cash investing and financing activities:Acquisition of capitalized software through note payable
    
    
    
    
    
    
    1,264Accrued capitalized hardware and software
    
    
    1,679
    
    
    
    1,430Deferred compensation reversal to equity
    
    
    136
    
    
    
    
  4




---



##### Table of Contents



DEALERTRACK HOLDINGS, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (unaudited)
 1. Business Description
  2. Basis of Presentation
  3. Net Income per Share
 Earnings per Share.
  Three Months Ended March 31,2007
    
    
    2006(In thousands, except share and pershare amounts)Numerator:Net income
    
    $
    4,825
    
    
    $
    3,436Denominator:Weighted average common stock outstanding (basic)
    
    
    38,625,215
    
    
    
    35,268,289Common equivalent shares from options to purchase
common stock and restricted common stock (1)
    
    
    1,605,979
    
    
    
    1,449,734Weighted average common stock outstanding (diluted)
    
    
    40,231,194
    
    
    
    36,718,023Basic net income per share
    
    $
    0.12
    
    
    $
    0.10Diluted net income per share
    
    $
    0.12
    
    
    $
    0.09
 5




---



##### Table of Contents



(1)
    
    In accordance with SFAS No. 128, for the three months ended March 31, 2007, we
have excluded 386,667 contingently issuable shares from diluted weighted average common stock
outstanding as their contingent conditions (a) have not been satisfied at the reporting date nor
(b) would have been satisfied if the reporting date was the end of the contingency period. This
stock-based plan was not in effect for the three months ended March 31, 2006 (Refer to Note 13 for
further information).  Three Months Ended March 31,2007
    
    
    2006Stock options
    
    
    380,131
    
    
    
    755,425Restricted common stock
    
    
    77,310
    
    
    
    126,000Total
    
    
    457,441
    
    
    
    881,425
 4. Comprehensive Income
  Three Months Ended March 31,2007
    
    
    2006Net income
    
    $
    4,825
    
    
    $
    3,436Foreign currency translation adjustments
    
    
    731
    
    
    
    (10
    )Total comprehensive income
    
    $
    5,556
    
    
    $
    3,426
 5. Stock-Based Compensation Expense
   Three Months Ended March 31,2007
    
    
    2006Stock options
    
    $
    1,225
    
    
    $
    915Restricted stock
    
    
    828
    
    
    
    284ESPP
    
    
    76
    
    
    
    25Total stock-based compensation expense
    
    $
    2,129
    
    
    $
    1,224
   6




---



##### Table of Contents



6. Business Combinations
 Curomax Acquisition
    Current assets
    
    $
    2,162Property and equipment
    
    
    339Intangible assets
    
    
    23,580Goodwill
    
    
    19,061Total assets acquired
    
    
    45,142Total liabilities assumed
    
    
    (5,902
    )Net assets acquired
    
    $
    39,240
    Unaudited Pro Forma Summary of Operations
  Three Months Ended March 31,2007
    
    2006(Unaudited)(In thousands, except per sharedata)Net revenue
    
    $
    52,565
    
    
    $
    42,893Net income
    
    $
    4,157
    
    
    $
    1,798Basic net income per share
    
    $
    0.11
    
    
    $
    0.05Diluted net income per share
    
    $
    0.10
    
    
    $
    0.05
 7




---



##### Table of Contents



7. Related Party Transactions
 Service Agreement with Related Parties  Financing Sources
    Service Agreements with Related Parties  Other Service and Information Providers
  8. Property and Equipment
  EstimatedUseful Life
    
    
    March 31,
    
    
    December 31,(Years)
    
    
    2007
    
    
    2006Computer equipment
    
    
    3
    
    
    $
    11,958
    
    
    $
    9,671Office equipment
    
    
    5
    
    
    
    1,301
    
    
    
    1,245Furniture and fixtures
    
    
    5
    
    
    
    1,693
    
    
    
    1,627Leasehold improvements
    
    
    5-7
    
    
    
    854
    
    
    
    63615,806
    
    
    
    13,179Less: Accumulated depreciation and amortization
    
    
    
    
    
    
    (7,699
    )
    
    
    (7,022
    )Total property and equipment, net
    
    
    
    
    
    $
    8,107
    
    
    $
    6,157
 9. Intangible Assets
  March 31, 2007
    
    
    December 31, 2006Gross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    AmortizationBook
    
    
    Accumulated
    
    
    Book
    
    
    Accumulated
    
    
    PeriodValue
    
    
    Amortization
    
    
    Value
    
    
    Amortization
    
    
    (Years)Customer contracts
    
    $
    38,773
    
    
    $
    (13,287
    )
    
    $
    19,308
    
    
    $
    (10,904
    )
    
    
    1-4Database
    
    
    15,900
    
    
    
    (7,364
    )
    
    
    15,900
    
    
    
    (6,666
    )
    
    
    3-6Trade names
    
    
    10,500
    
    
    
    (3,694
    )
    
    
    10,500
    
    
    
    (3,428
    )
    
    
    5-10Patents/technology
    
    
    16,844
    
    
    
    (10,267
    )
    
    
    16,031
    
    
    
    (8,806
    )
    
    
    2-5Non-compete agreement
    
    
    6,968
    
    
    
    (2,262
    )
    
    
    3,308
    
    
    
    (1,738
    )
    
    
    2-5Partner agreements
    
    
    4,400
    
    
    
    (412
    )
    
    
    4,400
    
    
    
    (206
    )
    
    
    5Other
    
    
    900
    
    
    
    (726
    )
    
    
    900
    
    
    
    (681
    )
    
    
    5Total
    
    $
    94,285
    
    
    $
    (38,012
    )
    
    $
    70,347
    
    
    $
    (32,429
    )
   8




---



##### Table of Contents



10. Goodwill
  Balance as of January 1, 2007
    
    $
    52,499Acquisition of Curomax (preliminary allocation)
    
    
    19,061Impact of change in Canadian dollar exchange rate
    
    
    338Balance as of March 31, 2007
    
    $
    71,898
 11. Other Accrued Liabilities
  March 31,
    
    
    December 31,2007
    
    
    2006Professional fees
    
    $
    1,055
    
    
    $
    1,167Software licenses
    
    
    1,181
    
    
    
    1,184Customer deposits
    
    
    2,678
    
    
    
    2,685Revenue share
    
    
    1,138
    
    
    
    1,926Servicing costs
    
    
    78
    
    
    
    128Public company costs
    
    
    288
    
    
    
    625Severance
    
    
    389
    
    
    
    489Taxes
    
    
    2,464
    
    
    
    1,774Computer equipment
    
    
    1,669
    
    
    
    Acquisition costs
    
    
    1,696
    
    
    
    49Other
    
    
    2,124
    
    
    
    1,951Total other accrued liabilities
    
    $
    14,760
    
    
    $
    11,978
 12. Income Taxes
 Accounting for Uncertainty in Income
Taxes  an Interpretation of FASB Statement No. 109 of FIN 48
   13. Long-Term Incentive Equity Awards
   9




---



##### Table of Contents



14. Commitments and Contingencies
 Executive Severance Commitment
  Retail Sales Tax
     Commitments
    Legal Proceedings
  DealerTrack Inc. v. RouteOne LLC
  10




---



##### Table of Contents



DealerTrack, Inc. v. Finance Express et al., CV-06-2335;  DealerTrack Inc. v. RouteOne and Finance Express et al., CV-06-6864; and  DealerTrack Inc. v. RouteOne and Finance Express et al., CV-07-215
        15. Segment Information
 Disclosures about Segments of an Enterprise and Related
Information
  Three Months Ended March 31,2007
    
    
    2006Transaction services revenue
    
    $
    34,290
    
    
    $
    24,540Subscription services revenue
    
    
    15,769
    
    
    
    11,631Other
    
    
    1,666
    
    
    
    1,764Total net revenue
    
    $
    51,725
    
    
    $
    37,935
 11




---



##### Table of Contents



16. Credit Facility
  17. Subsequent Event
  12




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 You should read the following discussion and analysis of our financial condition and results
of operations in conjunction with our consolidated financial statements. Certain statements in this
Quarterly Report on Form 10-Q are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities
Exchange Act of 1934, as amended (the Exchange Act). These statements involve a number of risks,
uncertainties and other factors that could cause our actual results, performance or achievements to
be materially different from any future results, performance or achievements expressed or implied
by these forward-looking statements. Factors that could materially affect such forward-looking
statements can be found in the section entitled Risk Factors in Part I, Item 1A. in our Annual Report on Form 10-K for the year ended December 31, 2006
filed with the SEC on March 16, 2007. Investors are urged to consider these factors carefully in
evaluating the forward-looking statements and are cautioned not to place undue reliance on such
forward-looking statements. The forward-looking statements made herein are only made as of the date
hereof and we will undertake no obligation to publicly update such forward-looking statements to
reflect subsequent events or circumstances.
 Overview
     Three Months Ended March 31,2007
    
    2006(In thousands, exceptfor non-financial data)EBITDA and Other Business Statistics:EBITDA (1)
    
    $
    14,643
    
    
    $
    10,715Capital expenditures, software and web site development costs
    
    $
    3,447
    
    
    $
    4,768Active dealers in our network as of end of the period (2)
    
    
    22,642
    
    
    
    21,794Active financing sources in our network as of end of period (3)
    
    
    344
    
    
    
    214
 
 (1)
    
    EBITDA represents net income before interest (income) expense, taxes, depreciation and
amortization. We present EBITDA because we believe that EBITDA provides useful information with
respect to the performance of our fundamental business activities and is also frequently used by
securities analysts, investors and other interested parties in the evaluation of comparable
companies. We rely on EBITDA as a primary measure to review and assess the operating performance of
our company and management team in connection with our executive compensation plan incentive
payments. In addition, our credit agreement uses EBITDA (with additional adjustments), in part, to
measure our compliance with covenants such as interest coverage.  
    
    EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
    
    EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
 13




---



##### Table of Contents




    
    EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts;
    
    Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any
cash requirements for such replacements; and
    
    Other companies may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.Because of these limitations, EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these
limitations by relying primarily on our GAAP results and using EBITDA
only supplementally. EBITDA is a measure of our performance that is not required by, or presented in accordance with, GAAP. EBITDA is not a measurement of our financial performance
under GAAP and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with GAAP or as an alternative to
cash flow from operating activities as a measure of our liquidity.The following table sets forth the reconciliation of EBITDA, a non-GAAP financial measure, to net income, our most directly comparable financial measure in accordance with GAAP.
 Three Months EndedMarch 31,2007
    
    
    2006(In thousands)Net income
    
    $
    4,825
    
    
    $
    3,436Interest income
    
    
    (1,531
    )
    
    
    (963
    )Interest expense
    
    
    62
    
    
    
    72Provision for income taxes
    
    
    3,441
    
    
    
    2,100Depreciation of property and equipment and
amortization of capitalized software and website
costs
    
    
    2,276
    
    
    
    1,892Amortization of acquired identifiable intangibles
    
    
    5,570
    
    
    
    4,178EBITDA
    
    $
    14,643
    
    
    $
    10,715
 (2)
    
    We consider a dealer to be active as of a date if the dealer
completed at least one revenue-generating credit application
processing transaction using the DealerTrack network during the
most recently ended calendar month.(3)
    
    We consider a financing source to be active in our network as of
a date if it is accepting credit application data electronically
from dealers in the DealerTrack network. Revenue
 Transaction Services Revenue.
 Subscription Services Revenue.
 Cost of Revenue and Operating Expenses
 Cost of Revenue.
  14




---



##### Table of Contents



Product Development Expenses.
 Selling, General and Administrative Expenses.
 Acquisitions
      Critical Accounting Policies and Estimates
   15




---



##### Table of Contents



Results of Operations
  Three Months Ended March 31,2007
    
    
    2006(% of net revenue)Consolidated Statements of Operations Data:Net revenue (1)
    
    
    100.0
    %
    
    
    100.0
    %Operating costs and expenses:Cost of revenue
    
    
    41.2
    %
    
    
    39.9
    %Product development
    
    
    4.6
    %
    
    
    5.8
    %Selling, general and administrative
    
    
    41.1
    %
    
    
    42.1
    %Total operating costs and expenses
    
    
    86.9
    %
    
    
    87.8
    %Income from operations
    
    
    13.1
    %
    
    
    12.2
    %Interest income
    
    
    3.0
    %
    
    
    2.5
    %Interest expense
    
    
    (0.1
    )%
    
    
    (0.2
    )%Income before provision for income taxes
    
    
    16.0
    %
    
    
    14.5
    %Provision for income taxes, net
    
    
    (6.7
    )%
    
    
    (5.5
    )%Net income
    
    
    9.3
    %
    
    
    9.0
    %
 Three Months Ended March 31,2007
    
    2006(% of net revenue)(1) Related party revenue
    
    
    1.2
    %
    
    
    24.4
    %
 Three Months Ended March 31, 2007 and 2006
 Revenue
  Transaction Services Revenue.
 Subscription Services Revenue.
 Cost of Revenue and Operating Expenses
 Cost of Revenue.
 Product Development Expenses.
 Selling, General and Administrative Expenses.
 Interest Income
  16




---



##### Table of Contents



Provision for Income Taxes
  Liquidity and Capital Resources
     Three Months EndedMarch 31,2007
    
    2006(In thousands)Net cash provided by operating activities
    
    $
    5,458
    
    
    $
    4,488Net cash used in investing activities
    
    
    (21,845
    )
    
    
    (67,812
    )Net cash provided by financing activities
    
    
    2,257
    
    
    
    611
 Operating Activities
  Investing Activities
  Financing Activities
  17




---



##### Table of Contents



Contractual Obligations
   Off-Balance Sheet Arrangements
  Industry Trends
  Effects of Inflation
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Foreign Currency Exposure
  Interest Rate Exposure
  18




---



##### Table of Contents



Item 4. Controls and Procedures
 Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  19




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  DealerTrack Inc. v. RouteOne LLC
  DealerTrack, Inc. v. Finance Express et al., CV-06-2335;  DealerTrack Inc. v. RouteOne and Finance Express et al., CV-06-6864; and  DealerTrack Inc. v. RouteOne and Finance Express et al., CV-07-215
        
 Item 1A. Risk Factors
  
 Item 2.  Unregistered Sales of Equity Securities and Use
 of Proceeds
  Repurchases
     Total

MaximumNumber of

NumberShares

of SharesPurchased

Thatas Part of

May Yet beTotal Number

Average Price

Publicly

Purchasedof Shares

Paid per

Announced

Under thePeriod

Purchased

Share

Program

ProgramJanuary 2007


1,314


$
29.10



n/a



n/aFebruary 2007


100


$
27.88



n/a



n/aMarch 2007





$




n/a



n/aTotal


1,414  Item 6. Exhibits
 ExhibitNumber
    
    Description of Document31.1
    
    Certification of Mark F. ONeil, Chairman, President and Chief
Executive Officer, pursuant to Rule 13a-14(a) and 15d-14(a),
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.31.2
    
    Certification of Robert J. Cox III, Senior Vice President,
Chief Financial Officer and Treasurer, pursuant to Rule
13a-14(a)and 15d-14(a), as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.32.1
    
    Certifications, of Mark F. ONeil, Chairman, President and
Chief Executive Officer, and Robert J. Cox III, Senior Vice
President, Chief Financial Officer and Treasurer, pursuant to
18 U.S.C Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
 20




---



##### Table of Contents



SIGNATURE
  DealerTrack Holdings, Inc.
(Registrant)Date May 9, 2007
    
    /s/ Robert J. Cox IIIRobert J. Cox IIISenior Vice President, Chief Financial Officer and Treasurer(Principal Financial and Accounting Officer)
 21




---



##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description of Document31.1
    
    Certification of Mark F. ONeil, Chairman, President and Chief
Executive Officer, pursuant to Rule 13a-14(a) and 15d-14(a),
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.31.2
    
    Certification of Robert J. Cox III, Senior Vice President,
Chief Financial Officer and Treasurer, pursuant to Rule
13a-14(a)and 15d-14(a), as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.32.1
    
    Certifications, of Mark F. ONeil, Chairman, President and
Chief Executive Officer, and Robert J. Cox III, Senior Vice
President, Chief Financial Officer and Treasurer, pursuant to
18 U.S.C Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
 22