Brookfield’s CDK Posts 18% Earnings Drop as Software Fears Grow

(Bloomberg) -- Brookfield Business Partners-backed CDK Global reported a double-digit earnings decline in the fourth quarter, a sign of struggles at the company right as Wall Street scrutinizes how the software sector will hold up against advancements in artificial intelligence.

The privately-held company, which provides software to car dealerships, delivered financial results to investors late Tuesday. CDK reported about $127 million of pro forma earnings before interest, taxes, depreciation and amortization, a roughly 18% drop from a year ago, according to the people, who asked not to be identified discussing private earnings. 

CDK’s lower earnings may have been due in part to higher costs and investments it made in the company, some of the people said.

CDK is among the scores of companies that have been swept up by a punishing selloff as a growing number of investors fear that AI will displace software firms. Those concerns have weighed on the price of assets tied to the companies themselves, as well as their backers.

CDK’s $4 billion first-lien term loan due in 2029 was quoted at about 68 cents on the dollar on Tuesday, down from 83.75 cents in mid-January, according to data compiled by Bloomberg. 

Revenue in the fourth quarter was mostly unchanged at $390 million compared to $392 million a year ago, the people said. The software firm threw off $8 million of free cash flow in the three-month period. 

CDK ended the year with $58 million of cash and $625 million of availability under its revolving credit facility after netting out $25 million in borrowings, the people said. 

A representative for CDK didn’t respond to a request for comment. A representative for Brookfield declined to comment. 

Last year, a group of CDK’s lenders organized with Gibson Dunn & Crutcher amid concerns about its financial strength. The company has been grappling with the aftermath of a cyberattack in 2024, which forced it to shut down all its systems.

Moody’s Ratings lowered its outlook on CDK to negative from stable in December, citing limited revenue and earnings growth, while its free cash flow has been impacted by financial settlements tied to two class action lawsuits stemming from the cyberattack.

More stories like this are available on bloomberg.com

©2026 Bloomberg L.P.