Cars.com Inc. (NYSE:CARS) Q3 2023 Earnings Conference Call November 2, 2023 9:00 AM ET Company Participants Robbin Moore-Randolph - Director of Investor Relations Alex Vetter - Chief Executive Officer Sonia Jain - Chief Financial Officer Conference Call Participants Thomas White - D.A. Davidson Rajat Gupta - JPMorgan Naved Khan - B. Riley Securities Gary Prestopino - Barrington Research Kunal Madhukar - UBS Marvin Fong - BTIG Operator Good morning and welcome to the Cars.com Third Quarter 2023 Earnings Conf ...

Financial Performance - Net income for the three months ended September 30, 2023, was $4,491 thousand, compared to a net loss of $2,941 thousand for the same period in 2022, representing a significant turnaround [9]. - For the nine months ended September 30, 2023, net income was $110,096 thousand, a substantial increase from $6,944 thousand in the same period of 2022 [9]. - Comprehensive income for the nine months ended September 30, 2023, was $110,096 thousand, compared to $8,229 thousand for the same period in 2022, indicating strong performance [9]. - Total revenue for the three months ended September 30, 2023, was $174.3 million, a 5.3% increase from $164.6 million in the same period of 2022 [24]. - For the nine months ended September 30, 2023, total revenue was $509.6 million, an increase of $23.9 million or 5% compared to $485.7 million for the same period in 2022 [126]. - The company’s diluted earnings per share for the nine months ended September 30, 2023, was $1.61, compared to $0.10 for the same period in 2022 [179]. - The company’s basic earnings per share for the nine months ended September 30, 2023, was $1.65, compared to $0.10 in the same period of 2022 [203]. Cash Flow and Liquidity - Cash provided by operating activities for the nine months ended September 30, 2023, was $91,580 thousand, slightly up from $91,291 thousand in the same period of 2022 [13]. - The company reported a net cash used in investing activities of $15,575 thousand for the nine months ended September 30, 2023, compared to $79,169 thousand in the same period of 2022, showing improved cash management [13]. - Cash and cash equivalents at the end of the period were $49,085 thousand, up from $31,920 thousand at the end of September 30, 2022 [13]. - The company had cash and cash equivalents of $49.1 million and total liquidity of $279.1 million as of September 30, 2023 [134]. - The company reported a net change in cash and cash equivalents of $17.37 million for the nine months ended September 30, 2023, compared to a decrease of $7.15 million for the same period in 2022 [158]. Expenses and Costs - Stock-based compensation for the nine months ended September 30, 2023, was $20,930 thousand, an increase from $17,103 thousand in the same period of 2022 [13]. - Total operating expenses increased by $15.3 million or 11% to $160.0 million, primarily due to higher costs in marketing and sales, product and technology, and depreciation [119]. - Marketing and sales expense represented 35% of total revenue for the nine months ended September 30, 2023, up from 34% in the same period of 2022, driven by higher compensation and marketing costs [101]. - Product and technology expenses represented 15% of total revenue for the nine months ended September 30, 2023, increasing due to higher compensation and third-party costs [129]. Revenue Breakdown - Subscription advertising and digital solutions revenue for the nine months ended September 30, 2023, reached $419.9 million, up 4.0% from $403.1 million in 2022 [24]. - Dealer revenue, which represents 90% of total revenue, increased by $11.7 million or 8% to $157.1 million, driven by growth in solutions revenue and marketplace initiatives [119]. - Display advertising revenue increased by 18.9% to $26.8 million for the three months ended September 30, 2023, compared to $22.7 million in 2022 [24]. - Other revenue decreased by $2.8 million or 24% to $8.8 million, primarily due to the expiration of an Accu-Trade license agreement [128]. Acquisitions and Goodwill - The company recorded goodwill of $76.9 million from the Accu-Trade acquisition, primarily due to expected sales growth and the value of the acquired workforce [37]. - The company acquired D2C Media Inc. for CA$105 million (approximately USD $76 million) and may pay an additional CA$35 million (approximately USD $25 million) based on performance [78]. - The company incurred total acquisition costs of $2.0 million for the nine months ended September 30, 2023, with $1.1 million recorded in the same period of 2022 [34]. Debt and Financing - As of September 30, 2023, the company had total indebtedness of $455.0 million, with an effective interest rate of 6.5% [106]. - The Company issued $400.0 million aggregate principal amount of 6.375% Senior Unsecured Notes due 2028 [58]. - The company entered into a Fourth Amendment to its Credit Agreement in Q2 2023, replacing LIBOR with SOFR and adjusting credit spread terms [42]. - As of September 30, 2023, the outstanding principal amount under the Term Loan was $55.0 million with an interest rate of 7.4% [57]. - The Company made $11.3 million in Term Loan payments during the nine months ended September 30, 2023 [57]. - The company reported a total of $1,103.188 million in assets as of September 30, 2023, an increase from $1,024.870 million as of December 31, 2022 [197]. Taxation - The effective income tax rate differed from the statutory federal income tax rate of 21% due to the release of a valuation allowance of $103.3 million as of December 31, 2022 [77]. - The income tax benefit for the nine months ended September 30, 2023, was $93.9 million, primarily due to the release of a significant portion of the valuation allowance for deferred tax assets [132]. - The net income for the nine months ended September 30, 2023, was primarily related to the release of a significant portion of the valuation allowance for deferred tax assets [85]. Share Repurchase - The company repurchased 1.3 million shares for $23.6 million at an average price of $18.30 during the nine months ended September 30, 2023, as part of its $200 million share repurchase program [107]. - The total number of shares that may yet be purchased under the announced share repurchase program is approximately $127.42 million [167]. - For the nine months ended September 30, 2023, the company repurchased 1.3 million shares for $23.6 million at an average price of $18.30 per share, compared to 3.5 million shares for $40.0 million at an average price of $11.47 per share in the same period of 2022 [185].

Cars.com Inc. (NYSE:CARS) Q2 2023 Earnings Conference Call August 3, 2023 9:00 AM ET Company Participants Robbin Moore-Randolph - Director, IR Alex Vetter - CEO Sonia Jain - CFO Conference Call Participants Tom White - D.A. Davidson Marvin Fong - BTIG Rajat Gupta - JPMorgan Gary Prestopino - Barrington Research Operator Good morning, and welcome to the Cars Second Quarter 2023 Earnings Conference Call. This call is being recorded, and a live webcast and the accompanying slides can be found at investor.cars. ...

Principles of Consolidation. The accompanying Consolidated Financial Statements include the accounts of Cars.com Inc. and its 100% owned subsidiaries. All intercompany transactions and accounts are eliminated in consolidation. Purchase Price Allocation. The fair values assigned to the tangible and intangible assets acquired and liabilities assumed were determined based on management's estimates and assumptions, as well as other information compiled by management, including thirdparty valuations that utilize ...

Cars.com Inc. (NYSE:CARS) Q1 2023 Results Conference Call May 4, 2023 9:00 AM ET Company Participants Robbin Moore-Randolph - Director, IR Alex Vetter - CEO Sonia Jain - CFO Conference Call Participants Thomas White - D.A. Davidson Gary Prestopino - Barrington Research Marvin Fong - BTIG Doug Arthur - Huber Research Operator Good morning, and welcome to the Cars First Quarter 2023 Earnings Conference Call. This call is being recorded, and a live webcast and the accompanying slides can be found at investor.c ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q Commission File Number: 001-37869 Delaware 81-3693660 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) Common Stock CARS New York Stock Exchange b For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Exact Name of Registrant as Specified in its Charter) Indicate by check mark whether the regi ...

Cars.com Inc. (NYSE:CARS) Q4 2022 Earnings Conference Call February 23, 2023 9:00 AM ET Company Participants Robbin Moore-Randolph - Director of Investor Relations. Alex Vetter - Chief Executive Officer Sonia Jain - Chief Financial Officer Conference Call Participants Tom White - D.A. Davidson Gary Prestopino - Barrington Research Marvin Fong - BTIG Doug Arthur - Huber Research Operator Good morning, and welcome to the CARS Fourth Quarter 2022 Earnings Conference Call. This call is being recorded, and a liv ...

Financial Performance - Full Year 2022 Revenue reached $653.9 million, a 5% year-over-year increase compared to $623.7 million in 2021[61] - Full Year 2022 Dealer Revenue was $579.2 million, up from $549.9 million in 2021[61] - Adjusted EBITDA for 2022 was $186.728 million, compared to $189.202 million in 2021[7] - Free Cash Flow for 2022 was $108.797 million, compared to $118.811 million in 2021[7] - The company anticipates Q1 2023 revenue between $166 million and $168 million, representing a 5% to 6% year-over-year growth[75] Key Metrics - Dealer Customers increased to 19,506 in Q4 2022, compared to 19,179 in Q4 2021[2, 49] - Website Customers reached 6,050 in Q4 2022, an increase of 700 customers year-over-year[39] - Monthly Average Revenue Per Dealer (ARPD) was $2,361 in Q4 2022[49] - Average Monthly Unique Visitors were 24.6 million in Q4 2022, compared to 23.6 million in Q4 2021[49] - Total Visits (Traffic) were 587 million for the full year 2022[37] Strategic Initiatives - The company has expanded its Total Addressable Market (TAM) to $50 billion[27] - Over 2,200 dealers have opted-in for CreditIQ instant financing since its nationwide launch in September 2022[53] - Accu-Trade has connected with over 500 customers, appraised over 600,000 vehicles, and generated over 80,000 instant offers for consumers[40]

[PART I](index=3&type=section&id=PART%20I) This section provides an overview of Cars.com Inc.'s business operations, strategic focus, and key risk factors impacting its performance and outlook [Business Overview](index=3&type=section&id=Item%201.%20Business) Cars.com Inc. (CARS) is a leading automotive marketplace platform connecting car shoppers with sellers, offering digital solutions through various brands - The company operates as a leading automotive marketplace and digital solutions provider, with a portfolio of brands including Cars.com, Dealer Inspire, FUEL, DealerRater, CreditIQ, and Accu-Trade[283](index=283&type=chunk)[284](index=284&type=chunk)[312](index=312&type=chunk) - In 2022, the company attracted an average of **26 million monthly unique visitors**, with approximately **85% of visitors** intending to purchase a vehicle within six months[285](index=285&type=chunk) - The primary customers are car dealers and OEMs; as of December 31, 2022, the company served **19,506 dealer customers** and nearly all OEMs in the United States[287](index=287&type=chunk)[315](index=315&type=chunk) - The company's growth strategy focuses on expanding its dealer network, increasing revenue per dealer by cross-selling solutions like Accu-Trade, enhancing shopper engagement, and innovating on its platform[304](index=304&type=chunk) - As of December 31, 2022, CARS had approximately **1,700 full-time employees**, none of whom are represented by a labor union[338](index=338&type=chunk) [Risk Factors](index=9&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks related to the automotive ecosystem, including economic downturns, supply chain disruptions, and changes in consumer demand - Business is subject to macroeconomic risks, including recession, inflation, and interest rate hikes, which can reduce consumer demand for automobiles and affect dealer spending on advertising[340](index=340&type=chunk)[370](index=370&type=chunk)[371](index=371&type=chunk) - The company faces intense competition from internet search engines, other online marketplaces (e.g., AutoTrader, CarGurus), and website solution providers; consolidation among dealers or OEMs could reduce demand for services[360](index=360&type=chunk)[374](index=374&type=chunk)[384](index=384&type=chunk) - Reliance on internet search engines (like Google) for traffic and the potential for algorithm changes pose a significant risk; a failure to appear prominently in search results could adversely affect traffic[348](index=348&type=chunk)[379](index=379&type=chunk) - Technology and data security are critical; the business is vulnerable to system failures, cyber-attacks, and data breaches, which could damage its reputation and result in financial liabilities; changes in data privacy laws (e.g., related to cookies) could also impact advertising effectiveness[419](index=419&type=chunk)[433](index=433&type=chunk)[435](index=435&type=chunk) - As of December 31, 2022, goodwill and other intangible assets were approximately **$809.9 million** (**79% of total assets**), which are subject to impairment risk[425](index=425&type=chunk) - Debt agreements contain restrictive covenants that limit operational flexibility, including restrictions on incurring additional debt, making distributions, and other corporate transactions[457](index=457&type=chunk)[487](index=487&type=chunk) [PART II](index=23&type=section&id=PART%20II) This section provides a detailed discussion and analysis of the company's financial condition, results of operations, market risks, and financial statements [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=25&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2022, Cars.com Inc. saw a 5% increase in total revenue to $653.9 million, driven by a 5% growth in Dealer revenue, with operating income rising 37% to $66.0 million [Overview of Results](index=25&type=section&id=Overview%20of%20Results) The company's performance in 2022 was marked by strategic acquisitions and steady growth in key metrics, including a 5% increase in average monthly unique visitors - In March 2022, the company acquired Accu-Trade for **$64.7 million in cash** and **$5.3 million in other consideration** to add vehicle appraisal, valuation, and logistics technology to its product suite[3](index=3&type=chunk) - In November 2021, the company acquired CreditIQ, an automotive fintech platform, for **$30.0 million in cash** at closing, with potential additional consideration based on future performance[469](index=469&type=chunk) - A three-year, **$200 million share repurchase program** was authorized in February 2022; during 2022, **4.2 million shares** were repurchased for **$49.0 million**[532](index=532&type=chunk)[544](index=544&type=chunk) Key Operating Metrics (2022 vs. 2021) | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Traffic (in thousands) | 587,388 | 591,499 | (1)% | | Average Monthly Unique Visitors (in thousands) | 26,400 | 25,064 | 5% | | Annual ARPD | $2,329 | $2,309 | 1% | Dealer Customer and Quarterly ARPD Trends | Metric | Dec 31, 2022 | Dec 31, 2021 | YoY % Change | Sep 30, 2022 | QoQ % Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Dealer Customers | 19,506 | 19,179 | 2% | 19,585 | 0% | | Quarterly ARPD | $2,361 | $2,333 | 1% | $2,334 | 1% | [Results of Operations (2022 vs 2021)](index=27&type=section&id=Results%20of%20Operations) For the year ended December 31, 2022, total revenue increased by 5% to $653.9 million, primarily due to a 5% rise in Dealer revenue, leading to a 37% increase in operating income Consolidated Results of Operations (in thousands) | Line Item | 2022 | 2021 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Total revenue** | **$653,876** | **$623,683** | **$30,193** | **5%** | | Dealer | $579,222 | $549,923 | $29,299 | 5% | | OEM and National | $58,557 | $65,085 | ($6,528) | (10)% | | Other | $16,097 | $8,675 | $7,422 | 86% | | **Total operating expenses** | **$587,840** | **$575,345** | **$12,495** | **2%** | | **Operating income** | **$66,036** | **$48,338** | **$17,698** | **37%** | | Income before income taxes | $22,576 | $9,483 | $13,093 | *** | | **Net income** | **$17,206** | **$10,791** | **$6,415** | **59%** | - Dealer revenue, representing **88.6% of total revenue**, grew by **5%** due to an increase in dealer customers and growth in digital solutions and advertising[505](index=505&type=chunk) - OEM and National revenue decreased by **10%** primarily due to pullbacks in OEM spending associated with production delays and supply-chain disruptions[9](index=9&type=chunk) - Product and technology expenses increased by **15%** due to investments related to recent acquisitions, talent acquisition, and other fees[539](index=539&type=chunk) - General and administrative expenses decreased by **8%**, mainly because 2021 included **$9.6 million** in compensation expense related to the CreditIQ Acquisition[11](index=11&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) The company's primary liquidity sources are cash from operations and its credit facilities, with total liquidity of $246.7 million as of December 31, 2022 - As of December 31, 2022, the company had **$31.7 million** in cash and cash equivalents and **$215.0 million** available under its Revolving Loan, for a total liquidity of **$246.7 million**[15](index=15&type=chunk)[16](index=16&type=chunk) Cash Flow Summary (in thousands) | Activity | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $128,511 | $138,003 | ($9,492) | | Net cash used in investing activities | ($84,377) | ($39,450) | ($44,927) | | Net cash used in financing activities | ($51,488) | ($127,203) | $75,715 | - The decrease in operating cash flow was mainly due to changes in working capital and the non-recurrence of a **$9.1 million tax refund** received in 2021[19](index=19&type=chunk) - The company has potential future contingent consideration payments related to the CIQ and Accu-Trade acquisitions, with a maximum of **$50.0 million** for CIQ (cash) and **$63.0 million** for Accu-Trade (cash or stock)[17](index=17&type=chunk)[18](index=18&type=chunk)[517](index=517&type=chunk) [Critical Accounting Policies and Estimates](index=31&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company's critical accounting policies involve significant management judgment and estimates, particularly in revenue recognition and business combinations - Revenue from marketplace subscription packages and add-on products is typically combined as a single performance obligation and recognized ratably over the contract term[22](index=22&type=chunk)[519](index=519&type=chunk) - Pay-per-lead revenue is recognized at the point in time the lead is delivered to the customer[23](index=23&type=chunk)[119](index=119&type=chunk) - Contingent consideration from acquisitions is measured at fair value using Level 3 inputs (e.g., Monte Carlo simulation) and is re-assessed at each reporting period, with changes recognized in earnings[54](index=54&type=chunk)[143](index=143&type=chunk)[553](index=553&type=chunk) - Intangible assets from acquisitions are recorded at fair value, determined using methods like multi-period excess earnings and relief-from-royalty, and are amortized over their useful lives (typically **5-10 years**)[53](index=53&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are related to changes in interest rates on its variable-rate debt and immaterial foreign currency exchange exposure - The company is exposed to interest rate risk on its variable-rate Term Loan and Revolving Loan; as of Dec 31, 2022, the Term Loan had an outstanding principal of **$66.3 million** at **6.7%** and the Revolving Loan had **$15.0 million** outstanding at **6.4%**[554](index=554&type=chunk) - Foreign currency exchange risk is currently immaterial, arising from a limited number of Canadian customers acquired through DealerRater, Dealer Inspire, and Accu-Trade[55](index=55&type=chunk) [Financial Statements and Supplementary Data](index=33&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The consolidated financial statements, audited by Ernst & Young LLP, present the company's financial position, results of operations, and cash flows for the three years ended December 31, 2022 - The independent auditor, Ernst & Young LLP, issued an unqualified opinion, stating that the financial statements are presented fairly in conformity with U.S. GAAP[56](index=56&type=chunk) - The auditor also issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2022, based on the COSO 2013 framework[67](index=67&type=chunk)[525](index=525&type=chunk) Consolidated Balance Sheet Data (in thousands) | Account | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $31,715 | $39,069 | | Goodwill | $102,856 | $26,227 | | Intangible assets, net | $707,088 | $769,424 | | **Total assets** | **$1,024,870** | **$1,007,205** | | Long-term debt, net | $458,249 | $457,383 | | **Total liabilities** | **$640,440** | **$609,185** | | **Total stockholders' equity** | **$384,430** | **$398,020** | Consolidated Income Statement Data (in thousands) | Account | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Total revenue | $653,876 | $623,683 | $547,503 | | Operating income (loss) | $66,036 | $48,338 | ($887,327) | | Net income (loss) | $17,206 | $10,791 | ($789,106) | | Diluted EPS | $0.25 | $0.15 | ($11.74) | Consolidated Cash Flow Data (in thousands) | Account | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $128,511 | $138,003 | $138,616 | | Net cash used in investing activities | ($84,377) | ($39,450) | ($16,712) | | Net cash used in financing activities | ($51,488) | ($127,203) | ($67,734) | | Net (decrease) increase in cash | ($7,354) | ($28,650) | $54,170 | [Controls and Procedures](index=62&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with no material changes - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[246](index=246&type=chunk) - Based on the COSO 2013 framework, management concluded that internal control over financial reporting was effective as of December 31, 2022[247](index=247&type=chunk) - The independent registered public accounting firm, Ernst & Young LLP, issued an unqualified audit report on the effectiveness of the company's internal control over financial reporting[219](index=219&type=chunk)[249](index=249&type=chunk) - There were no changes in internal control over financial reporting during the period that materially affected, or are reasonably likely to materially affect, these controls[248](index=248&type=chunk) [PART III](index=65&type=section&id=PART%20III) This section incorporates by reference information regarding directors, executive compensation, security ownership, and related party transactions from the company's proxy statement [Director and Executive Information, Compensation, and Corporate Governance](index=65&type=section&id=Items%2010-14) Information for Items 10 through 14 of the Form 10-K is incorporated by reference from the company's definitive proxy statement for the 2023 Annual Meeting of Stockholders - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the Company's definitive proxy statement, to be filed within **120 days** of the fiscal year-end[40](index=40&type=chunk)[229](index=229&type=chunk)[255](index=255&type=chunk) [PART IV](index=66&type=section&id=PART%20IV) This section details the financial statements, schedules, and exhibits filed as part of the Form 10-K, including the Credit Agreement and compensation plans [Exhibits and Financial Statement Schedules](index=66&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the financial statements, financial statement schedules, and exhibits filed as part of the Form 10-K, with required statements in Item 8 - The financial statements required by this item are listed in Part II, Item 8 of the report[265](index=265&type=chunk) - The report includes Schedule II - Valuation and Qualifying Accounts, which details the allowance for doubtful accounts for 2020, 2021, and 2022[69](index=69&type=chunk)[613](index=613&type=chunk) - The Exhibit Index lists numerous documents filed with the report, including the Credit Agreement and its amendments, indentures, and various executive and employee compensation plans[266](index=266&type=chunk)[566](index=566&type=chunk)

Cars.com Inc. (NYSE:CARS) Q3 2022 Earnings Conference Call November 3, 2022 9:00 AM ET Company Participants Alex Vetter - CEO Sonia Jain - CFO Jandy Tomy - EVP, Finance & Treasurer Robbin Moore-Randolph - Director, IR Conference Call Participants Tom White - D.A. Davidson & Co. Naved Khan - Truist Securities Marvin Fong - BTIG Doug Arthur - Huber Research Partners Operator Good morning, and welcome to the CARS Third Quarter 2022 Earnings Conference Call. This call is being recorded, and a live webcast can b ...