The network, comparable in scale to AutoNation, alerted its stakeholders that the forthcoming earnings report for the quarter ending on June 30, scheduled for release on July 31, will reflect an adverse effect from the cyberattack. The impact is estimated at approximately $1.50 per share, which is roughly a third less than initially projected. Current projections place the quarter’s earnings around the $3 mark, as reported by financial news outlets.
The revised earnings for the second quarter of 2024 consider the estimated revenue losses from June 19 to June 30 and one-off expenses linked to the incident. These expenses include fixed payments made to maintain the loyalty of commission-based staff, crucial for safeguarding the company’s operations.
In spite of this news, the dealership’s shares experienced an uptick of over 3% on the day of the announcement, reaching about $176 per share by 2 p.m. Eastern Time. The company had previously reported a gross profit of $556 million for the first quarter of 2024.
The company has communicated to the SEC that while the full extent and consequences of the cyberattack are still being assessed, it is not anticipated to significantly affect the company’s overall financial health or its continuous operational results.
Like other dealership networks, this company was impacted by a ransomware incident targeting CDK Global, a software firm that equips over 15,000 car dealerships in the U.S. and Canada with a comprehensive array of technological solutions.
CDK Global’s principal offering is a cloud-based platform that assists dealerships in managing customer relations, sales, financing, services, inventory, and administrative tasks.
The ransomware attack occurred on June 19, causing a system-wide shutdown and compelling numerous businesses to revert to manual operations or scale down significantly. The restoration of the systems commenced earlier this month, with the majority of clients resuming online activities around July 4.
Recent reports suggest that CDK Global may have settled a ransom of $25 million on June 21, as indicated by blockchain data analysis.
The dealership network has reinstated most of its services, although some systems, particularly those facilitating automated vehicle transactions, scheduling, payments, and reporting, are still either out of service or functioning at a limited capacity. Restoration efforts are ongoing, and these system outages are not expected to have a substantial impact on the company’s business.
A full recovery of all systems is anticipated by the end of July. Industry experts have estimated that the downtime caused by the ransomware attack could potentially cost auto dealers in excess of $900 million.
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