SecProbe.io

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Ms. Barbara C. Jacobs, Esq.             File No. 039481-0002
Assistant Director
U.S. Securities and Exchange Commission
Division of Corporation Finance
100 F Street, NE
Mail Stop 4561
Washington, D.C.  20549

            RE:   DEALERTRACK HOLDINGS, INC.
                  REGISTRATION STATEMENT ON FORM S-1 (FILE NO. 333-126944)

Dear Ms. Jacobs:

      On behalf of DealerTrack Holdings, Inc. (the "REGISTRANT"), we are
responding to the comments of the Staff of the U.S. Securities and Exchange
Commission (the "COMMISSION") set forth in your letter dated October 21, 2005
with respect to the Registrant's above-referenced Registration Statement on Form
S-1 (the "REGISTRATION STATEMENT") filed with the Commission on July 28, 2005,
as amended by Amendment No. 1 to the Registration Statement filed on September
22, 2005 and Amendment No. 2 to the Registration Statement ("AMENDMENT NO. 2")
filed on October 11, 2005. Earlier today, the Registrant filed via EDGAR
Amendment No. 3 to the Registration Statement ("AMENDMENT NO. 3") revised to
reflect changes prompted by your comments and to include certain other
information. Amendment No. 3 contains the various revisions described below. For
your convenience, we have enclosed a courtesy package which includes five copies
of Amendment No. 3, two of which have been marked to show changes from Amendment
No. 2.

      The Staff's comments of October 21, 2005 are set forth below in bold,
followed by the Registrant's responses to each comment.

FORM S-1/A

NOTES TO UNAUDITED COMBINED CONDENSED PRO FORMA STATEMENTS OF OPERATIONS,
PAGE 38

1.    WE NOTE THAT YOU PROVIDE PRO FORMA, AS ADJUSTED INFORMATION THAT GIVES
      EFFECT TO THE OFFERING AND THE RELATED REPAYMENT OF DEBT. HOWEVER, IT DOES
      NOT APPEAR THAT YOU HAVE ADJUSTED THE WEIGHTED AVERAGE SHARES OUTSTANDING
      TO INCLUDE THE SHARES THAT ARE ASSOCIATED WITH THE OFFERING PROCEEDS THAT
      WILL BE USED FOR THE DEBT REPAYMENT. PLEASE REVISE YOUR PRO FORMA, AS
      ADJUSTED WEIGHTED AVERAGE SHARES OUTSTANDING AND THE RELATED EARNINGS PER
      SHARE
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OCTOBER 24, 2005
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      TO REFLECT INCLUSION OF THESE SHARES AND ADD DISCLOSURE THAT CLEARLY
      DESCRIBES YOUR CALCULATIONS. ALTERNATELY, EXPLAIN TO US WHY YOUR CURRENT
      PRESENTATION IS APPROPRIATE.

Response: The Registrant has revised its disclosure in the Unaudited Combined
Condensed Pro Forma Statements of Operations to revise its pro forma, as
adjusted weighted average shares outstanding (basic and diluted) and the related
earnings per share to reflect the inclusion of the shares that are associated
with the conversion of the redeemable convertible participating preferred stock
and the estimated common stock to be sold in this offering, and to provide the
calculations, as requested. Please refer to pages 38, 39 and 45 of Amendment No.
3.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

STOCK-BASED COMPENSATION, PAGE 53

2.    WE HAVE READ YOUR RESPONSE TO PRIOR COMMENT NUMBERS 9 AND 10 AND YOUR
      SUPPLEMENTAL RESPONSE DATED OCTOBER 17, 2005. PLEASE REVISE YOUR
      DISCLOSURE TO PROVIDE MORE SPECIFIC INFORMATION REGARDING THE GENERAL
      CHARACTERISTICS OF THE COMPARABLE COMPANIES AND THE MULTIPLES USED IN YOUR
      VALUATIONS.

Response: The Registrant has revised its disclosure to provide more specific
information regarding the general characteristics of the comparable companies
and the multiples used in the valuations, as requested. Please refer to page 54
of Amendment No. 3.

3.    IT IS UNCLEAR TO US WHY THE 15% "IPO DISCOUNT" APPLIED IN YOUR MAY 2005
      VALUATION IS APPROPRIATE. PLEASE PROVIDE US WITH OBJECTIVE SUPPORT FOR
      THIS DISCOUNT AND EXPLAIN, IN DETAIL, HOW THIS DISCOUNT IS CONSISTENT WITH
      PARAGRAPH 57 OF THE AICPA GUIDE. IN ADDITION, EXPLAIN TO US WHY THE TOTAL
      DISCOUNT (20%) APPLIED IN MAY IS HIGHER THAN THE DISCOUNT (5%) APPLIED IN
      THE EARLIER JANUARY VALUATION AND EXPLAIN HOW THAT EARLIER VALUATION
      INCORPORATED THE CONCEPT OF THIS "IPO DISCOUNT."

Response: The Registrant respectfully submits that it used only a 5% illiquidity
discount in determining the fair value of its common shares in the May and June
2005 option and restricted stock awards and not a 20% discount. As set forth in
Chapter 6, paragraph 57 of the AICPA Practice Aid, the Registrant is permitted
to adjust the value of its privately issued securities by using a
"marketability" or illiquidity discount. Paragraph 57 further states that the
prospects for future liquidity should be considered in determining the
appropriate level of this discount. The Registrant believes that the 5% discount
is appropriate and consistent with paragraph 57 given its expectation at the
time of grant that it would complete its initial public offering in the latter
half of 2005.

The Registrant determined the fair value of its common stock for purposes of the
May and June 2005 option and restricted stock awards by looking forward to the
anticipated price at which its common stock would be sold in an initial public
offering that was, at that time, expected to be only a few months away. The
Registrant determined at that time that the anticipated public offering price
would be between $14.00 and $16.00 based on an average of the valuations
estimated by three separate investment banks (as discussed in detail in Exhibit
B to our original response letter, dated September 22, 2005). The Registrant
determined that the option and restricted stock awards granted so near the date
of the initial public offering should be valued at only a slight discount to the
expected offering price in that offering. As a result, the Registrant applied a
modest (5%) illiquidity discount to determine the value of the stock for
purposes of the May and June 2005 option and restricted stock awards. This 5%
illiquidity discount was the same as the illiquidity discount applied by the
Registrant in its January 2005 valuation.
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OCTOBER 24, 2005
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The Registrant believes that the fair market value of its common stock at the
time it consummates its initial public offering will be the initial public
offering price. As contemplated by Chapter 6, paragraph 55 of the AICPA Practice
Aid, "transactions in equity securities of the enterprise with unrelated
investors" are strong evidence of value. Indeed, the Registrant believes that
the price at which a willing seller and a willing buyer transact business is the
very best evidence of fair market value. Therefore, the Registrant respectfully
submits that the analysis it engaged in to value its stock for purposes of the
May and June stock and option grants properly started with the estimated future
initial public offering price as contemplated by paragraph 55 of the Practice
Aid and applied a modest illiquidity discount (5%) as contemplated by paragraph
57 of the Practice Aid.

The fact that, in estimating the expected future initial public offering price,
the prospective underwriters all applied a discount to the values produced by
the market approach - Guideline Companies method, does not mean that the
prospective underwriters were applying an illiquidity discount within the
meaning of paragraph 57 of the Practice Aid. The prospective underwriters were
all attempting to estimate the value of the Registrant's common stock in the
public market. Paragraph 57 contemplates a discount relating to restrictions on
transferability and the absence of a public market. Following consummation of
the initial public offering, there will be an active trading market and the
shares sold in the initial public offering will be free of any transfer
restrictions. An illiquidity discount, as contemplated by paragraph 57 of the
Practice Aid, is not appropriate for a publicly traded security. The so-called
"IPO discount" applied by each of the three prospective underwriters reflected
their assessment that a newly public company will not likely enjoy the same
multiples as its more mature comparable companies. These three investment banks
each independently concluded that a 15% discount to the valuation determined by
comparing the Registrant directly to its closest public company comparables was
appropriate to reflect the public market's view that a newly public company
would not enjoy the same earnings multiple as more mature public companies. The
market imposes this "discount" on newly public companies by applying a lower
multiple to their expected future earnings than would be applied to more
seasoned public companies because the market sees future earnings estimates of
unseasoned public companies as more speculative. Newly public companies have no
history of meeting earnings estimates and have not been subject to the rigorous
reporting and internal control requirements of the Securities Exchange Act of
1934. Because Empire valued the Registrant based upon actual reported historical
results (as opposed to estimates of future earnings), Empire did not need to
address this market reality.

Over time, the multiple applied to the Registrant by the public market may grow
to equal that of its more mature public company comparables. However, there can
be no assurance of that outcome. As the Staff is no doubt aware, not every
initial public offering trades up in the aftermarket.

In summary, the Registrant respectfully submits that its methodology for valuing
its common stock for purposes of the May and June 2005 option and restricted
stock awards was consistent with the AICPA Practice Aid in that it began with an
estimate of the price the common stock would likely sell for in a public sale
(where no liquidity or transfer restrictions exist) and applied a modest (5%)
illiquidity discount as contemplated by paragraph 57 of the Practice Aid. The
fact that the prospective underwriters all agreed that the Registrant would not
immediately enjoy the same multiple of projected future earnings as comparable
companies that have an established track record of meeting earnings estimates
should not be misconstrued as a discount attributable to transfer restrictions
or the absence of a public secondary market.
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OCTOBER 24, 2005
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PRINCIPAL AND SELLING STOCKHOLDERS, PAGE 107

4.    PLEASE REFER TO PRIOR 13. PLEASE REVISE FOOTNOTE (2) TO PROVIDE THE
      SIMILAR DISCLOSURE, THAT IS THAT THIS SELLING SHAREHOLDER HAD NO
      AGREEMENTS, UNDERSTANDINGS OR ARRANGEMENTS WITH ANY OTHER PERSONS, EITHER
      DIRECTLY OR INDIRECTLY, TO DISPOSE OF THE SECURITIES BEING OFFERED FOR ITS
      ACCOUNT, AS PROVIDED IN RESPONSE TO OUR PRIOR COMMENT FOR J.P. MORGAN,
      WELLS FARGO AND ADP, INC.

Response: The Registrant has revised the disclosure in footnote (2) to state
that the shareholder had no agreements, understandings or arrangements with any
other persons, either directly or indirectly, to dispose of the securities being
offered for its account, as requested. Please refer to page 109 of Amendment No.
3.

                                    * * * * *

      We hope the foregoing answers are responsive to your comments and look
forward to resolving any outstanding issues as quickly as possible. As you know,
we are planning to print preliminary prospectuses early this week and commence
the "road show" by the end of this week. If you have any questions in connection
with our responses to your comments, please feel free to call me at (212)
906-1284, Daniel Nam at (212) 906-1703 or Jason Frank at (212) 906-1796. Thank
you again for your assistance.

                                        Sincerely,

                                        /s/  Kirk A. Davenport II

                                        Kirk A. Davenport II
                                        of LATHAM & WATKINS LLP

Enclosures

cc:   Rebekah Toton, Esq., U.S. Securities and Exchange Commission
      Stathis Kouninis, U.S. Securities and Exchange Commission
      Eric D. Jacobs, Esq., DealerTrack Holdings, Inc.
      John J. Huber, Esq., Latham & Watkins LLP
      Daniel U. Nam, Esq., Latham & Watkins LLP
      Jason S. Frank, Esq., Latham & Watkins LLP
      Richard D. Truesdell, Jr., Esq., Davis Polk & Wardwell

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