[Form 10-Q Filing Information](index=1&type=section&id=Form%2010-Q%20Filing%20Information) Cars.com Inc. filed its Quarterly Report on Form 10-Q for the period ended June 30, 2025, detailing its registrant status and outstanding common stock - Cars.com Inc. filed its Quarterly Report on Form 10-Q for the period ended June 30, 2025 [2](index=2&type=chunk) Registrant Status | Status | Indicator | | :-------------------- | :-------- | | Large accelerated filer | ☒ | | Accelerated filer | ☐ | | Non-accelerated filer | ☐ | | Smaller reporting company | ☐ | | Emerging growth company | ☐ | - As of July 31, 2025, the registrant had **61,445,496 shares of common stock outstanding** [4](index=4&type=chunk) [Table of Contents](index=2&type=section&id=Table%20of%20Contents) This section provides an organized listing of all chapters and sub-sections within the Form 10-Q report [PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited consolidated financial statements and management's discussion and analysis for the reporting period [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements and detailed notes for the reporting periods [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's assets, liabilities, and stockholders' equity as of June 30, 2025, and December 31, 2024 Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Total current assets | $179,645 | $214,330 | | Total assets | $1,064,654 | $1,111,865 | | Total current liabilities | $98,926 | $116,885 | | Total liabilities | $581,437 | $600,380 | | Total stockholders' equity | $483,217 | $511,485 | - Total assets decreased by **$47.211 million** from December 31, 2024, to June 30, 2025, primarily driven by a decrease in cash and cash equivalents and intangible assets [9](index=9&type=chunk) - Total stockholders' equity decreased by **$28.268 million**, from **$511.485 million** to **$483.217 million**, reflecting net loss and share repurchases [9](index=9&type=chunk)[16](index=16&type=chunk) [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) This section details the company's revenues, expenses, and net income for the three and six months ended June 30, 2025, and 2024 Consolidated Statements of Income Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $178,739 | $178,894 | $357,763 | $359,070 | | Operating income | $15,246 | $9,517 | $21,705 | $22,261 | | Net income | $7,009 | $11,381 | $4,996 | $12,165 | | Basic EPS | $0.11 | $0.17 | $0.08 | $0.18 | | Diluted EPS | $0.11 | $0.17 | $0.08 | $0.18 | - Net income for the three months ended June 30, 2025, decreased by **38%** to **$7.009 million** from **$11.381 million** in the prior-year period [11](index=11&type=chunk) - For the six months ended June 30, 2025, net income decreased by **59%** to **$4.996 million** from **$12.165 million** in the prior-year period [11](index=11&type=chunk) [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the company's comprehensive income, including net income and other comprehensive income items, for the specified periods Consolidated Statements of Comprehensive Income Highlights (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $7,009 | $11,381 | $4,996 | $12,165 | | Foreign currency translation adjustments | $1,793 | $(338) | $1,337 | $(1,076) | | Comprehensive income | $8,802 | $11,043 | $6,333 | $11,089 | - Comprehensive income for the three months ended June 30, 2025, was **$8.802 million**, a decrease from **$11.043 million** in the prior-year period, primarily due to lower net income [14](index=14&type=chunk) [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) This section outlines changes in the company's stockholders' equity, including net income, share repurchases, and stock-based compensation Stockholders' Equity Changes (in thousands) | Item | Six Months Ended June 30, 2025 | | :------------------------------------------ | :----------------------------- | | Balance at December 31, 2024 | $511,485 | | Net loss (Q1 2025) | $(2,013) | | Net income (Q2 2025) | $7,009 | | Repurchases of common stock | $(44,967) | | Stock-based compensation | $15,065 | | Balance at June 30, 2025 | $483,217 | - The company repurchased **3.7 million shares** for **$44.6 million** during the six months ended June 30, 2025, at an average price of **$12.17 per share** [48](index=48&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025, and 2024 Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | Change | | :----------------- | :-------- | :-------- | :-------- | | Operating activities | $55,683 | $68,722 | $(13,039) | | Investing activities | $(29,124) | $(12,493) | $(16,631) | | Financing activities | $(49,343) | $(66,223) | $16,880 | | Net decrease in Cash | $(22,969) | $(10,127) | $(12,842) | - Net cash provided by operating activities decreased by **$13.039 million**, primarily due to lower net income and increased earnout payments related to the D2C acquisition [105](index=105&type=chunk) - Cash used in investing activities increased by **$16.631 million**, mainly due to the DealerClub Acquisition, partially offset by proceeds from the sale of the RepairPal equity investment [106](index=106&type=chunk) [Notes to the Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements%20(Unaudited)) This section provides detailed explanations and disclosures supporting the unaudited consolidated financial statements [NOTE 1. Description of Business and Summary of Significant Accounting Policies](index=8&type=section&id=NOTE%201.%20Description%20of%20Business%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note describes Cars.com Inc.'s business operations and outlines the significant accounting policies applied in preparing the financial statements - Cars.com Inc., d/b/a Cars Commerce Inc., is an audience-driven technology company empowering the automotive industry, simplifying car buying and selling with data and machine learning-powered products [21](index=21&type=chunk) - The Cars Commerce platform includes Cars.com, Dealer Inspire, D2C Media, AccuTrade, DealerClub, and Cars Commerce Media Network [21](index=21&type=chunk) - The company is evaluating new FASB guidance (ASU 2024-03 and ASU 2023-09) on expense disaggregation and income tax disclosures, effective for fiscal years beginning after December 15, 2026, and December 15, 2024, respectively [26](index=26&type=chunk)[27](index=27&type=chunk) [NOTE 2. Revenue](index=10&type=section&id=NOTE%202.%20Revenue) This note provides disaggregated revenue information by source and discusses factors influencing revenue trends Disaggregated Revenue Information (in thousands) | Revenue Source | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Dealer | $158,477 | $159,843 | $317,621 | $321,658 | | OEM and National | $16,637 | $15,828 | $32,916 | $31,135 | | Other | $3,625 | $3,223 | $7,226 | $6,277 | | Total revenue | $178,739 | $178,894 | $357,763 | $359,070 | - Dealer revenue, the largest stream, decreased by **1%** for both the three and six months ended June 30, 2025, primarily due to lower average dealer count and customer mix changes, partially offset by solutions growth [73](index=73&type=chunk)[86](index=86&type=chunk) - OEM and National revenue increased by **5%** and **6%** for the three and six months, respectively, driven by increased OEM spending and higher on-the-lot inventory levels [74](index=74&type=chunk)[87](index=87&type=chunk) [NOTE 3. Business Combinations](index=10&type=section&id=NOTE%203.%20Business%20Combinations) This note details recent acquisition activities, including the purchase of DealerClub Inc. and related financial considerations - In January 2025, Cars.com Inc. acquired DealerClub Inc., a dealer-to-dealer digital wholesale auction platform, for a total purchase consideration of **$25.3 million** [30](index=30&type=chunk) - The acquisition included a preliminary goodwill allocation of **$22.0 million**, primarily attributed to expected sales growth and the value of the acquired workforce [32](index=32&type=chunk)[38](index=38&type=chunk) - The acquisition also includes potential performance-based consideration of up to **$88.0 million**, contingent on DealerClub's revenue targets through December 31, 2028 [31](index=31&type=chunk) [NOTE 4. RepairPal Equity Investment](index=12&type=section&id=NOTE%204.%20RepairPal%20Equity%20Investment) This note describes the sale of the RepairPal equity investment and the proceeds received - During Q4 2024, the Company sold its RepairPal equity investment, receiving **$9.5 million** in closing proceeds during Q1 2025, reflected in investing activities [40](index=40&type=chunk) [NOTE 5. Debt](index=12&type=section&id=NOTE%205.%20Debt) This note provides information on the company's debt structure, compliance with covenants, and available borrowing capacity - As of June 30, 2025, the Company was in compliance with all debt covenants, with a Senior Secured Net Leverage Ratio of **0.2x** and a Consolidated Interest Coverage Ratio of **6.7x** [41](index=41&type=chunk) - The Company amended its Credit Agreement in May 2024, resulting in a new **$350.0 million** Revolving Loan due in 2029, with **$290.0 million** available to borrow as of June 30, 2025 [42](index=42&type=chunk)[43](index=43&type=chunk) - Outstanding indebtedness as of June 30, 2025, included **$400.0 million** in 6.375% Senior Unsecured Notes due 2028 and **$60.0 million** under the Revolving Loan [43](index=43&type=chunk)[44](index=44&type=chunk)[99](index=99&type=chunk) [NOTE 6. Commitments and Contingencies](index=13&type=section&id=NOTE%206.%20Commitments%20and%20Contingencies) This note outlines the company's legal proceedings and other commitments and contingencies - The Company is involved in various legal proceedings in the ordinary course of business but does not expect their ultimate resolution to have a material adverse effect on its financial position, results of operations, or cash flows [47](index=47&type=chunk) [NOTE 7. Stockholders' Equity](index=13&type=section&id=NOTE%207.%20Stockholders'%20Equity) This note details changes in stockholders' equity, including share repurchase programs and activity - The Board of Directors authorized a three-year share repurchase program on February 27, 2025, to acquire up to **$250.0 million** of common stock [48](index=48&type=chunk)[101](index=101&type=chunk) - During the six months ended June 30, 2025, the Company repurchased **3.7 million shares** for **$44.6 million** at an average price of **$12.17 per share** [48](index=48&type=chunk)[101](index=101&type=chunk) [NOTE 8. Stock-Based Compensation](index=13&type=section&id=NOTE%208.%20Stock-Based%20Compensation) This note describes the company's stock-based compensation plans and activity for restricted and performance share units - Stockholders approved amendments to the Omnibus Plan on June 4, 2025, increasing authorized shares by **4.0 million** to a total of **22.0 million** and extending the plan term to June 4, 2035 [49](index=49&type=chunk) Restricted Share Units (RSUs) Activity (in thousands) | RSU Activity | Number of RSUs | Weighted-Average Grant Date Fair Value | | :-------------------------- | :------------- | :------------------------------------- | | Outstanding as of Dec 31, 2024 | 3,637 | $16.52 | | Granted | 2,738 | $11.60 | | Vested and delivered | (1,401) | $16.23 | | Forfeited | (284) | $15.42 | | Outstanding as of June 30, 2025 | 4,690 | $13.80 | Performance Share Units (PSUs) Activity (in thousands) | PSU Activity | Number of PSUs | Weighted-Average Grant Date Fair Value | | :-------------------------- | :------------- | :------------------------------------- | | Outstanding as of Dec 31, 2024 | 931 | $16.37 | | Granted | 542 | $12.94 | | Vested and delivered | (245) | $14.78 | | Forfeited | (44) | $16.94 | | Outstanding as of June 30, 2025 | 1,184 | $15.10 | [NOTE 9. Earnings Per Share](index=15&type=section&id=NOTE%209.%20Earnings%20Per%20Share) This note presents the calculation of basic and diluted earnings per share for the reporting periods Earnings Per Share (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $7,009 | $11,381 | $4,996 | $12,165 | | Basic weighted-average common shares | 63,163 | 66,534 | 63,859 | 66,426 | | Diluted weighted-average common shares | 63,842 | 67,821 | 64,476 | 67,514 | | Earnings per share, basic | $0.11 | $0.17 | $0.08 | $0.18 | | Earnings per share, diluted | $0.11 | $0.17 | $0.08 | $0.18 | - Potential shares from the DealerClub Acquisition's contingent consideration were excluded from diluted EPS calculations as the contingency for issuance was not met [54](index=54&type=chunk) [NOTE 10. Income Taxes](index=15&type=section&id=NOTE%2010.%20Income%20Taxes) This note explains the effective income tax rate and its reconciliation to the statutory federal rate - The effective income tax rate for the six months ended June 30, 2025, differed from the statutory federal rate of **21%** primarily due to tax expense on stock-based compensation and nondeductible items [55](index=55&type=chunk)[95](index=95&type=chunk) [NOTE 11. Segment Information](index=15&type=section&id=NOTE%2011.%20Segment%20Information) This note clarifies that the company operates as a single operating and reportable segment - The Company operates as a single operating and reportable segment, with the CEO making resource allocation decisions to maximize consolidated financial results [56](index=56&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes the company's financial condition, results of operations, key metrics, and capital resources [Business Overview](index=22&type=section&id=Business%20Overview) This section describes Cars Commerce's role as an audience-driven technology company simplifying car buying and selling through its integrated platform - Cars Commerce is an audience-driven technology company that simplifies car buying and selling through data and machine learning-powered products across pretail, retail, and post-sale activities [62](index=62&type=chunk) - The platform integrates five key capabilities: Cars.com marketplace, Dealer Inspire and D2C Media for digital retail, AccuTrade for trade-ins, DealerClub for wholesale auctions, and Cars Commerce Media Network for in-market media solutions [62](index=62&type=chunk) [Overview of Results](index=22&type=section&id=Overview%20of%20Results) This section provides a high-level summary of the company's financial performance, including revenue and net income trends Financial Performance Overview (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $178,739 | $178,894 | $357,763 | $359,070 | | Net income | $7,009 | $11,381 | $4,996 | $12,165 | - Total revenue remained relatively flat for both the three and six months ended June 30, 2025, compared to the prior-year periods [63](index=63&type=chunk) - Net income saw a significant decrease for both the three-month (**-38%**) and six-month (**-59%**) periods year-over-year [63](index=63&type=chunk) [Key Operating Metrics](index=22&type=section&id=Key%20Operating%20Metrics) This section presents key performance indicators such as traffic, unique visitors, dealer customers, and average revenue per dealer Key Operating Metrics (Traffic and Average Monthly Unique Visitors in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :-------------------------- | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | Traffic | 162,036 | 158,117 | 2% | 332,123 | 329,554 | 1% | | Average Monthly Unique Visitors | 26,649 | 26,107 | 2% | 27,848 | 27,220 | 2% | | Dealer Customers (June 30) | 19,412 | 19,390 | 0% | N/A | N/A | N/A | | Monthly Average Revenue Per Dealer (ARPD) | $2,435 | $2,474 | (2)% | N/A | N/A | N/A | - Traffic and Average Monthly Unique Visitors increased by **1-2%** year-over-year, driven by increased consumer demand in anticipation of rising automotive tariffs and strategic marketing shifts [64](index=64&type=chunk)[66](index=66&type=chunk) - Dealer Customers increased slightly by **1%** from March 31, 2025, while Monthly Average Revenue Per Dealer (ARPD) decreased by **2%** for the three months ended June 30, 2025, primarily due to changes in customer mix [64](index=64&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk) [Factors Affecting Our Performance](index=24&type=section&id=Factors%20Affecting%20Our%20Performance) This section discusses internal and external factors influencing the company's business performance and long-term success - Business performance is influenced by the broader automotive ecosystem, including supply/demand for vehicles, global supply chain disruptions, vehicle costs, retail prices, EV adoption rates, and macroeconomic factors like inflation, tariffs, and interest rates [70](index=70&type=chunk) - Long-term success depends on executing a platform strategy, including growing an engaged audience, expanding dealer relationships, transforming OEM partnerships, and leveraging digital solutions like AI to help customers compete in the online car-shopping environment [71](index=71&type=chunk) [Results of Operations - Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024](index=25&type=section&id=Results%20of%20Operations%20-%20Three%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Three%20Months%20Ended%20June%2030%2C%202024) This section analyzes the company's revenue and operating expenses for the three-month period, highlighting changes and their drivers Revenue and Operating Expenses (Three Months Ended June 30, in thousands) | Category | 2025 | 2024 | $ Change | % Change | | :-------------------------- | :-------- | :-------- | :-------- | :------- | | Total revenue | $178,739 | $178,894 | $(155) | (0)% | | Cost of revenue and operations | $30,547 | $31,030 | $(483) | (2)% | | Product and technology | $28,634 | $27,583 | $1,051 | 4% | | Marketing and sales | $57,757 | $60,213 | $(2,456) | (4)% | | General and administrative | $21,682 | $22,980 | $(1,298) | (6)% | | Depreciation and amortization | $24,873 | $27,571 | $(2,698) | (10)% | | Total operating expenses | $163,493 | $169,377 | $(5,884) | (3)% | | Operating income | $15,246 | $9,517 | $5,729 | 60% | | Net income | $7,009 | $11,381 | $(4,372) | (38)% | - Operating income increased by **60%** to **$15.246 million**, driven by a **3%** decrease in total operating expenses, particularly in marketing and sales, and depreciation and amortization [73](index=73&type=chunk)[79](index=79&type=chunk)[81](index=81&type=chunk) - Net income decreased by **38%** due to a significant reduction in 'Other income, net' (down **84%**), primarily from changes in the fair value of contingent consideration in the prior year [73](index=73&type=chunk)[83](index=83&type=chunk) [Results of Operations - Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024](index=28&type=section&id=Results%20of%20Operations%20-%20Six%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Six%20Months%20Ended%20June%2030%2C%202024) This section analyzes the company's revenue and operating expenses for the six-month period, highlighting changes and their drivers Revenue and Operating Expenses (Six Months Ended June 30, in thousands) | Category | 2025 | 2024 | $ Change | % Change | | :-------------------------- | :-------- | :-------- | :-------- | :------- | | Total revenue | $357,763 | $359,070 | $(1,307) | (0)% | | Cost of revenue and operations | $61,486 | $60,992 | $494 | 1% | | Product and technology | $57,112 | $55,668 | $1,444 | 3% | | Marketing and sales | $117,982 | $119,376 | $(1,394) | (1)% | | General and administrative | $47,566 | $45,837 | $1,729 | 4% | | Depreciation and amortization | $51,912 | $54,936 | $(3,024) | (6)% | | Total operating expenses | $336,058 | $336,809 | $(751) | (0)% | | Operating income | $21,705 | $22,261 | $(556) | (2)% | | Net income | $4,996 | $12,165 | $(7,169) | (59)% | - Operating income decreased by **2%** to **$21.705 million**, while total operating expenses remained relatively flat [86](index=86&type=chunk) - Net income decreased by **59%** to **$4.996 million**, primarily due to a significant decrease in 'Other income, net' (down **79%**) compared to the prior-year period [86](index=86&type=chunk)[94](index=94&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's sources of liquidity, cash position, debt, and capital commitments - Primary liquidity sources are cash flows from operations, available cash reserves, and borrowing capacity under the credit facility, which are believed to be adequate for the next 12 months [97](index=97&type=chunk) - As of June 30, 2025, Cash and cash equivalents were **$27.7 million**, and total liquidity, including the undrawn Revolving Loan, was **$317.7 million** [98](index=98&type=chunk) - The Company has potential earnout payments, including **CAD$15.0 million** (approx. **USD$10.8 million**) paid in April 2025 for the D2C Media acquisition and up to **$88.0 million** for the DealerClub acquisition [104](index=104&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that the company's market risk exposures have not materially changed since the previous annual report - The Company's market risk exposures have not materially changed since December 31, 2024 [111](index=111&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes in internal control over financial reporting - Management concluded that disclosure controls and procedures were effective as of June 30, 2025, providing reasonable assurance of timely and accurate financial reporting [112](index=112&type=chunk) - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, the Company's internal control during the quarter [114](index=114&type=chunk) [PART II. OTHER INFORMATION](index=33&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part includes additional information not covered in the financial statements, such as legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 6 for details on the company's legal proceedings - Information on legal proceedings is provided in Note 6 (Commitments and Contingencies) of the Consolidated Financial Statements [117](index=117&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the annual report - No material changes to the risk factors have occurred since the Annual Report on Form 10-K for the year ended December 31, 2024 [118](index=118&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's common stock repurchase activity under its publicly announced program for the quarter Common Stock Repurchase Activity (Three Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Maximum Dollar Value of Shares that May Yet Be Purchased (in thousands) | | :-------------------------- | :------------------------------- | :--------------------------- | :-------------------------------------------------------------------- | | April 1 through April 30, 2025 | 823,942 | $11.24 | $229,013 | | May 1 through May 31, 2025 | 730,494 | $10.69 | $221,201 | | June 1 through June 30, 2025 | 558,888 | $10.79 | $215,168 | | **Total** | **2,113,324** | | | - The Company repurchased **2,113,324 shares** during the quarter, with **$215.168 million** remaining under the **$250.0 million** share repurchase program as of June 30, 2025 [120](index=120&type=chunk)[123](index=123&type=chunk) [Item 3. Defaults Upon Senior Securities](index=33&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms that the company reported no defaults upon senior securities during the period - There were no defaults upon senior securities [121](index=121&type=chunk) [Item 4. Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company's operations - Mine Safety Disclosures are not applicable to the Company [122](index=122&type=chunk) [Item 5. Other Information](index=34&type=section&id=Item%205.%20Other%20Information) This section confirms no directors or officers adopted, modified, or terminated Rule 10b5-1 trading arrangements - None of the Company's directors or officers adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the fiscal quarter ended June 30, 2025 [124](index=124&type=chunk) [Item 6. Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including corporate governance documents and certifications - Key exhibits include the Amended and Restated Certificate of Incorporation, Bylaws, and the Amended and Restated Omnibus Incentive Compensation Plan [126](index=126&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer pursuant to the Sarbanes-Oxley Act of 2002 are also filed [126](index=126&type=chunk) [Signatures](index=36&type=section&id=Signatures) This section provides the official signatures of the Chief Executive Officer and Chief Financial Officer, certifying the report - The report was signed on August 7, 2025, by T. Alex Vetter, Chief Executive Officer, and Sonia Jain, Chief Financial Officer [132](index=132&type=chunk)

Group 1 - Shares of Cars.com (CARS) have increased by 4.7% over the past four weeks, closing at $13.13, with a mean price target of $17.08 indicating a potential upside of 30.1% [1] - The mean estimate consists of six short-term price targets with a standard deviation of $5.02, where the lowest estimate is $12.00 (an 8.6% decline) and the highest is $25.00 (a 90.4% increase) [2] - Analysts show strong agreement on the company's ability to report better earnings than previously predicted, which supports the potential for stock upside [4][11] Group 2 - The Zacks Consensus Estimate for the current year has risen by 0.8% over the past month, with one estimate increasing and no negative revisions [12] - CARS holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13] - While consensus price targets may not be reliable for predicting stock gains, they can indicate the direction of price movement, which appears to be a useful guide [14]

Core Viewpoint - The article emphasizes the importance of value investing as a strategy to identify strong stocks, particularly highlighting Cars.com (CARS) as a notable opportunity due to its favorable valuation metrics and earnings outlook [2][3][6]. Company Analysis - Cars.com (CARS) currently holds a Zacks Rank of 2 (Buy) and has received an A grade in the Value category, indicating it is among the strongest value stocks available [3]. - The P/S ratio for CARS is 1.16, which is lower than the industry average of 1.25, suggesting that CARS may be undervalued compared to its peers [4]. - CARS has a P/CF ratio of 5.28, significantly lower than the industry average of 14.63, indicating a strong cash flow outlook and potential undervaluation [5]. - Over the past year, CARS's P/CF has fluctuated between a high of 9.71 and a low of 4.20, with a median of 7.09, further supporting the notion of its current undervaluation [5]. - The combination of these metrics positions Cars.com as a strong candidate for value investors, particularly given its positive earnings outlook [6].

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $179 million, reflecting a steady year-over-year performance with a 5% growth in OEM and national revenue, partially offset by temporary softness in dealer revenue [5][21] - Adjusted EBITDA for Q2 was $51 million, with an adjusted EBITDA margin of 28.5%, at the high end of the outlook range, driven by cost efficiencies [27][34] - Net income for Q2 was $7 million, or $0.11 per diluted share, compared to $11 million, or $0.17 per diluted share a year ago [27] Business Line Data and Key Metrics Changes - Dealer count increased to 19,412, up 162 dealers quarter-over-quarter, marking the best sequential organic growth in over three years [5][14] - Solutions products, including AccuTrade and Dealer Club, contributed significantly to growth, with AccuTrade's subscriber base reaching 1,070 dealers [16][21] - Average revenue per dealer (ARPD) was $2,435, down approximately $40 year-over-year and sequentially, attributed to customer and product mix [28] Market Data and Key Metrics Changes - Traffic on the cars.com platform reached a record 162 million in Q2, up 2% year-over-year, with average monthly unique visitors totaling 26.6 million [10] - OEM and national revenue grew 5% year-over-year, with nearly half of OEM partners increasing their spending on the platform [8][25] - The marketplace performance showed strong momentum, with total marketplace customers growing sequentially every month since January [22] Company Strategy and Development Direction - The company is focused on enhancing its marketplace and solutions offerings, with new product innovations and repackaging efforts aimed at driving revenue growth [7][29] - Continued investment in AI features is expected to differentiate the platform and drive lead volume and quality [12][43] - The company anticipates low single-digit revenue growth for 2025, with expectations for acceleration heading into 2026 [9][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to achieve stronger financial results in the second half of 2025, driven by growth initiatives and improved sales velocity [20][34] - There remains uncertainty regarding new vehicle production and pricing forecasts, which could impact discretionary media spending [33] - Management noted that dealer sentiment is improving, with a willingness to compete more aggressively for volume [88] Other Important Information - The company raised its full-year share repurchase target to $70 million to $90 million, consistent with its commitment to return value to shareholders [20][31] - Free cash flow for the year-to-date was $42 million, down year-over-year, primarily due to anticipated earn-out payments [30] Q&A Session Summary Question: Clarification on outlook and acceleration in business - Management expects to see acceleration from Q2 to Q3 to Q4, driven by unit growth and repackaging efforts [38] Question: Average revenue per dealer expectations - Management anticipates that ARPD will improve sequentially from Q2 to Q3 as repackaging takes effect [40] Question: Impact of AI on marketplace model - Management views AI as an opportunity to enhance user experience and engagement, with a focus on integrating AI capabilities into the platform [42][43] Question: Drivers of dealer revenue growth and ARPD decline - The decline in ARPD is attributed to customer mix and product mix, with a growing base of solutions-first customers impacting initial ARPD [49] Question: Retention of AccuTrade customers - Retention is improving, particularly with enterprise-level deals that standardize AccuTrade across multiple stores [66] Question: Marketplace repackaging rollout - The repackaging effort will be rolled out over the course of two quarters, focusing on creating added value for dealers [68] Question: OEM growth as a tailwind - OEM growth is expected to contribute positively to revenue goals in both Q3 and Q4, with management staying close to OEM partners [73] Question: Competitive threat from Amazon - Management acknowledges Amazon as a potential threat but believes the company is well-positioned due to its established platform and strong dealer relationships [78]

Company Performance - Cars.com reported quarterly earnings of $0.41 per share, missing the Zacks Consensus Estimate of $0.46 per share, but showing an increase from $0.38 per share a year ago, representing an earnings surprise of -10.87% [1] - The company posted revenues of $178.74 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 0.59%, and showing a slight decrease from year-ago revenues of $178.89 million [2] - Over the last four quarters, Cars.com has not surpassed consensus EPS estimates and has topped consensus revenue estimates only once [2] Stock Performance - Cars.com shares have declined approximately 24.2% since the beginning of the year, contrasting with the S&P 500's gain of 7.9% [3] - The stock's immediate price movement will largely depend on management's commentary during the earnings call [3] Future Outlook - The current consensus EPS estimate for the coming quarter is $0.48 on revenues of $181.96 million, and for the current fiscal year, it is $1.75 on revenues of $725.04 million [7] - The estimate revisions trend for Cars.com was favorable ahead of the earnings release, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Internet - Commerce industry, to which Cars.com belongs, is currently in the bottom 34% of over 250 Zacks industries, suggesting that the industry outlook can significantly impact stock performance [8]

Financial Performance - Second quarter revenue remained steady at $178.7 million year-over-year[45] - Adjusted EBITDA margin reached 28.5%, hitting the high end of the projected 27% to 29% range[14, 53] - The company repurchased 3.7 million shares during the first half of 2025[13] Operational Highlights - Total traffic visits reached 162 million in the second quarter[14, 18] - The company saw a 50% quarter-over-quarter increase in completed transactions on DealerClub[39] - AccuTrade appraisals increased by 14% quarter-over-quarter and 45% year-over-year, totaling approximately 925,000 appraisals in Q2[36] Strategic Initiatives - OEM and National revenue increased by 5% year-over-year[14, 15, 45] - The company added 162 dealer customers quarter-over-quarter, bringing the total to 19,412[14, 30] - AI-powered search capabilities led to a 2x higher lead submission rate compared to standard search, with nearly 20% of internet leads originating from the new search capability[22] Outlook - The company projects low-single digit year-over-year revenue growth for the second half of 2025[58] - The company anticipates an Adjusted EBITDA margin of 29% to 31% for the full year 2025[62] - The company increased its share repurchase target to $70 to $90 million for the full year[62]

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) This section provides an overview of Cars.com's Q2 2025 financial and operational performance, including key metrics and CEO insights on growth initiatives [Q2 2025 Financial Highlights](index=1&type=section&id=Q2%202025%20Financial%20Highlights) Cars.com reported Q2 2025 financial results with total revenue remaining flat year-over-year, net income decreased significantly, while adjusted net income and adjusted EBITDA saw slight increases | Metric | Quarter Ended June 30, 2025 | Quarter Ended June 30, 2024 | Change % | | :----------------------------- | :-------------------------- | :-------------------------- | :------- | | Total Revenue | $178,739 | $178,894 | NM | | Net income | $7,009 | $11,381 | (38%) | | Adjusted net income | $26,412 | $26,048 | 1% | | Adjusted EBITDA | $50,898 | $50,425 | 1% | | Net income per diluted share | $0.11 | $0.17 | (35%) | | Adjusted net income per diluted share | $0.41 | $0.38 | 8% | [Q2 2025 Key Metrics and Operational Highlights](index=1&type=section&id=Q2%202025%20Key%20Metrics%20and%20Operational%20Highlights) The company achieved significant sequential growth in dealer customers and maintained strong unique visitor numbers, reflecting positive operational trends despite a slight decline in average revenue per dealer | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | Q/Q Change % | Y/Y Change % | | :---------------------------------- | :------------ | :------------- | :------------ | :----------- | :----------- | | Average Monthly Unique Visitors (MM) | 26.6 | 29.0 | 26.1 | (8%) | 2% | | Traffic ("Visits") (MM) | 162.0 | 170.1 | 158.1 | (5%) | 2% | | Monthly Average Revenue Per Dealer ("ARPD") | $2,435 | $2,473 | $2,474 | (2%) | (2%) | | Dealer Customers | 19,412 | 19,250 | 19,390 | 1% | NM | - Dealer Customers grew to **19,412**, up over **160** dealers quarter-over-quarter, representing the best sequential customer growth in over three years (excluding the Q4 2023 acquisition of D2C Media)[4](index=4&type=chunk)[5](index=5&type=chunk) - Average Monthly Unique Visitors were up **2%** year-over-year, driven by strong consumer demand, tariff-motivated shopping behavior, and strategic marketing investments[4](index=4&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Alex Vetter highlighted positive customer and product trends, leading to confidence in improved revenue momentum for the second half of the year, driven by strong sequential organic customer growth and progress in key initiatives like AI product innovation and DealerClub - CEO noted "best sequential organic customer growth in over three years" and expansion across major product lines, with the Cars.com marketplace accounting for more than half of that growth[2](index=2&type=chunk) - Key growth initiatives, including repackaging, AI product innovation, and the continued ramp of the DealerClub auction platform, are in progress and on-track[2](index=2&type=chunk) - First half operating results, coupled with new commercial leadership, support expectations of an "upward trajectory in the second half of the year"[2](index=2&type=chunk) [Detailed Q2 2025 Results](index=2&type=section&id=Detailed%20Q2%202025%20Results) This section provides a detailed breakdown of the company's Q2 2025 financial performance, including revenue by segment, operating expenses, and profitability metrics [Revenue Performance](index=2&type=section&id=Revenue%20Performance) Total revenue for Q2 2025 was $178.7 million, flat year-over-year, dealer revenue saw a slight decline due to mix changes, while OEM and National revenue increased, partly influenced by temporary shifts related to tariff announcements | Revenue Type | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Y/Y Change | | :---------------- | :--------------------- | :--------------------- | :--------- | | Total Revenue | $178,739 | $178,894 | Roughly flat | | Dealer Revenue | $158,477 | $159,843 | (1%) | | OEM and National Revenue | $16,637 | $15,828 | 5% | - Subscription-based Dealer revenue was down **1%** year-over-year, primarily reflecting changes in customer and product mix, with marketplace performance offsetting growth across websites and appraisal technology[5](index=5&type=chunk) - OEM and National revenue was up **5%** year-over-year, inclusive of temporary shifts in media investments, primarily at the start of the quarter, as automakers adjusted to tariff announcements and impacts[5](index=5&type=chunk) [Operating Expenses](index=2&type=section&id=Operating%20Expenses) Total operating expenses decreased to $163.5 million in Q2 2025 from $169.4 million in Q2 2024, this reduction was achieved through cost streamlining actions, including headcount and lease-related expenses, offsetting costs from the DealerClub acquisition, adjusted operating expenses also decreased by 2% | Expense Type | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Y/Y Change | | :-------------------------- | :--------------------- | :--------------------- | :--------- | | Total operating expenses | $163,493 | $169,377 | (3.5%) | | Adjusted operating expenses | $152,714 | $156,040 | (2%) | - Operating expenses included costs associated with the January 2025 acquisition of DealerClub, which were fully offset by actions taken to streamline costs, including headcount and lease-related expenses, as well as shifts in marketing investments[6](index=6&type=chunk) [Net Income and Adjusted EBITDA](index=2&type=section&id=Net%20Income%20and%20Adjusted%20EBITDA) Net income for Q2 2025 was $7.0 million ($0.11 per diluted share), a 38% decrease from Q2 2024, primarily due to changes in the fair value of contingent consideration, adjusted net income increased 1% to $26.4 million ($0.41 per diluted share), and Adjusted EBITDA rose 1% to $50.9 million, representing 28.5% of revenue | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Y/Y Change | | :----------------------------- | :--------------------- | :--------------------- | :--------- | | Net income | $7,009 | $11,381 | (38%) | | Net income per diluted share | $0.11 | $0.17 | (35%) | | Adjusted net income | $26,412 | $26,048 | 1% | | Adjusted net income per diluted share | $0.41 | $0.38 | 8% | | Adjusted EBITDA | $50,898 | $50,425 | 1% | | Adjusted EBITDA margin | 28.5% | N/A | N/A | - The change in Net income is primarily attributable to changes in the fair value of contingent consideration in the prior-year period associated with prior acquisitions[7](index=7&type=chunk) [Financial Position & Capital Allocation](index=2&type=section&id=Financial%20Position%20%26%20Capital%20Allocation) This section details the company's financial health, including cash flow, balance sheet metrics, capital allocation strategies, and insights from the CFO [Cash Flow and Balance Sheet](index=2&type=section&id=Cash%20Flow%20and%20Balance%20Sheet) Net cash provided by operating activities for the first half of 2025 decreased to $55.7 million from $68.7 million in the prior year, primarily due to increased earnout payments, free cash flow also declined, the company's total debt was $460.0 million, with net leverage at 2.1x, within the target range, and total liquidity of $317.7 million | Metric | H1 2025 (in thousands) | H1 2024 (in thousands) | Y/Y Change | | :---------------------------------- | :--------------------- | :--------------------- | :--------- | | Net cash provided by operating activities | $55,683 | $68,722 | (19%) | | Free cash flow | $41,847 | $56,447 | (26%) | - The decrease in free cash flow is largely attributable to the anticipated increase in earnout payments associated with D2C Media[8](index=8&type=chunk) | Metric | Amount (as of June 30, 2025) | | :-------------------- | :--------------------------- | | Total debt outstanding | $460.0 million | | Total net leverage | 2.1x | | Total liquidity | $317.7 million | | Cash and cash equivalents | $27.7 million | | Revolver capacity | $290.0 million | - The Company's total net leverage of **2.1x** is within its target range of **2.0x to 2.5x**[9](index=9&type=chunk) [Share Repurchases](index=2&type=section&id=Share%20Repurchases) Cars.com repurchased 2.1 million shares for $23.1 million in Q2 2025, bringing the first-half total to 3.7 million shares for $44.6 million, the company raised its full-year 2025 share repurchase target to $70-$90 million, reaffirming its commitment to returning capital to shareholders - Repurchased **2.1 million** shares of common stock for **$23.1 million** in the second quarter[10](index=10&type=chunk) - Total repurchases for the first half of 2025 amounted to **3.7 million** shares for **$44.6 million**[10](index=10&type=chunk) - The Company is raising its target for share repurchases for 2025 to a range of **$70 to $90 million**[10](index=10&type=chunk) [CFO Commentary](index=3&type=section&id=CFO%20Commentary) CFO Sonia Jain emphasized the execution of growth initiatives alongside meaningful operational efficiencies, leading to reduced operating expenses and an Adjusted EBITDA margin at the high end of expectations, she also highlighted exceeding capital return commitments and the raised full-year share repurchase target - Achieved an Adjusted EBITDA margin of **28.5%** in Q2, at the high end of expectations, due to judicious cost management that reduced operating expenses by **3%** year-over-year[12](index=12&type=chunk) - Exceeded capital return commitment by buying back **2.1 million** shares in Q2, equivalent to **127%** of free cash flow[12](index=12&type=chunk) - AccuTrade was selected as the enterprise trade and appraisal solution by a leading dealer group, expanding its technology into roughly **150** total stores by end of 2025[11](index=11&type=chunk) - AccuTrade appraisals grew **45%** year-over-year, and DealerClub transaction volume was up **50%** quarter-over-quarter alongside double-digit active user growth[11](index=11&type=chunk) [Business Outlook & Strategic Initiatives](index=3&type=section&id=Business%20Outlook%20%26%20Strategic%20Initiatives) This section outlines the company's forward-looking guidance for the second half of 2025, details the earnings call, and provides an overview of Cars Commerce's business model and brands [Outlook for H2 2025](index=3&type=section&id=Outlook%20for%20H2%202025) The company anticipates low-single digit revenue growth for the second half of 2025, driven by ongoing growth initiatives like product adoption, innovation, and broad-based repackaging, however, market factors such as vehicle production and affordability may introduce volatility, full-year Adjusted EBITDA margin guidance remains at 29% to 31% - The Company anticipates **low-single digit revenue growth** for the second half of 2025[13](index=13&type=chunk) - Growth initiatives include driving product adoption and innovation, and broad-based repackaging[13](index=13&type=chunk) - Market factors like vehicle production levels and affordability have been volatile year-to-date and are subject to impact customer spending[13](index=13&type=chunk) - The Company is reaffirming Full Year Adjusted EBITDA margin guidance of **29% to 31%**[14](index=14&type=chunk) [Earnings Call Information](index=3&type=section&id=Earnings%20Call%20Information) Management held a conference call and webcast on August 7, 2025, at 8:00 a.m. CT, with an archive available on the Cars Commerce Investor Relations website - Management held a conference call and webcast on August 7, 2025, at 8:00 a.m. CT[15](index=15&type=chunk) - An archive of the webcast will be available at investor.cars.com following the conclusion of the call[15](index=15&type=chunk) [About Cars Commerce](index=3&type=section&id=About%20Cars%20Commerce) Cars Commerce is an audience-driven technology company that simplifies car buying and selling through AI-driven products and solutions across pretail, retail, and post-sale activities, its platform includes leading brands like Cars.com, Dealer Inspire, AccuTrade, DealerClub, and Cars Commerce Media Network - Cars Commerce is an audience-driven technology company empowering the automotive industry, simplifying car buying and selling with powerful products, solutions and AI-driven technologies[16](index=16&type=chunk) - The Cars Commerce platform is organized around four industry-leading brands: Cars.com, Dealer Inspire, AccuTrade, DealerClub, and Cars Commerce Media Network[16](index=16&type=chunk) [Non-GAAP Financial Measures & Definitions](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Definitions) This section provides detailed definitions for the company's non-GAAP financial measures and key operational metrics, along with important disclosures regarding forward-looking statements [Non-GAAP Definitions](index=3&type=section&id=Non-GAAP%20Definitions) This section defines several non-GAAP financial measures used by the company, including Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, and Adjusted Operating Expenses, explaining their components and adjustments, these measures are presented to provide supplemental information on operating performance and are used for internal targets and credit agreements - Non-GAAP financial measures (Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income, Free Cash Flow, and Adjusted Operating Expenses) are presented as supplemental measures of operating performance[17](index=17&type=chunk) - Adjusted EBITDA is defined as net income (loss) before interest expense, income tax, depreciation, amortization, stock-based compensation, unrealized mark-to-market adjustments, foreign currency gains/losses, and certain other items (transaction-related, severance, write-offs)[21](index=21&type=chunk) - Adjusted Net Income is GAAP net (loss) income excluding, net of their related tax effects: amortization of intangible assets, stock-based compensation expense, unrealized mark-to-market adjustments, foreign currency exchange gains and losses, and certain other items[23](index=23&type=chunk) - Free Cash Flow is net cash provided by operating activities less capital expenditures, including purchases of property and equipment and capitalization of internally developed technology[24](index=24&type=chunk) - Adjusted Operating Expenses are total operating expenses adjusted to exclude stock-based compensation, write-off and impairments of goodwill, intangible assets, long-lived assets, severance, transformation and other exit costs and transaction-related items[24](index=24&type=chunk) [Key Metric Definitions](index=4&type=section&id=Key%20Metric%20Definitions) This section provides definitions for key operational metrics: Average Monthly Unique Visitors (UVs), Traffic (Visits), Monthly Average Revenue Per Dealer (ARPD), and Dealer Customers, clarifying how each is measured and what it represents for the company's performance - Average Monthly Unique Visitors ("UVs") are defined as the number of distinct visitors that engage with the platform during that month, identified by unique device/browser combinations or app installations[25](index=25&type=chunk) - Traffic ("Visits") is defined as the number of visits to Cars.com desktop and mobile properties (responsive sites and mobile apps)[25](index=25&type=chunk) - Monthly Average Revenue Per Dealer ("ARPD") is defined as Dealer revenue (excluding digital advertising services and DealerClub) during the period divided by the monthly average number of Dealer Customers, indicating the value proposition of its platform[26](index=26&type=chunk) - Dealer Customers represent dealerships using the Company's products as of the end of each reporting period, with each physical or virtual dealership location counted separately[27](index=27&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) The report includes forward-looking statements based on current expectations and beliefs, which are subject to inherent uncertainties, risks, and important factors beyond the company's control, investors are cautioned not to rely solely on these statements, and the company undertakes no obligation to update them, except as required by law - Forward-looking statements are based on current expectations, beliefs, strategies, estimates, projections, and assumptions, but are inherently uncertain and not guarantees of future strategic action, performance, or results[28](index=28&type=chunk) - Actual results, performance, achievements, strategic actions or prospects could differ materially from those expressed or implied by these forward-looking statements due to a number of risks, uncertainties and other important factors, many of which are beyond our control[28](index=28&type=chunk)[29](index=29&type=chunk) - The Company undertakes no obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements[30](index=30&type=chunk) [Consolidated Financial Statements](index=7&type=section&id=Consolidated%20Financial%20Statements) This section presents the company's official consolidated financial statements, including statements of income, balance sheets, and cash flows for the reported periods [Consolidated Statements of Income](index=7&type=section&id=Consolidated%20Statements%20of%20Income) The Consolidated Statements of Income present the company's revenues, operating expenses, and net income for the three and six months ended June 30, 2025, compared to the prior year periods, key figures show a slight decrease in total revenue for the six-month period and a notable decline in net income | Metric (in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------- | :-------- | :-------- | :-------- | :-------- | | Total Revenue | $178,739 | $178,894 | $357,763 | $359,070 | | Operating income | $15,246 | $9,517 | $21,705 | $22,261 | | Net income | $7,009 | $11,381 | $4,996 | $12,165 | | Diluted EPS | $0.11 | $0.17 | $0.08 | $0.18 | [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) The Consolidated Balance Sheets provide a snapshot of the company's assets, liabilities, and stockholders' equity as of June 30, 2025, compared to December 31, 2024, total assets and total liabilities both decreased, while stockholders' equity also saw a reduction | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Total current assets | $179,645 | $214,330 | | Total assets | $1,064,654 | $1,111,865 | | Total current liabilities | $98,926 | $116,885 | | Total liabilities | $581,437 | $600,380 | | Total stockholders' equity | $483,217 | $511,485 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The Consolidated Statements of Cash Flows detail the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025, compared to the prior year, net cash provided by operating activities decreased, while net cash used in investing activities increased significantly, and net cash used in financing activities decreased | Metric (in thousands) | H1 2025 | H1 2024 | | :---------------------------------- | :-------- | :-------- | | Net cash provided by operating activities | $55,683 | $68,722 | | Net cash used in investing activities | $(29,124) | $(12,493) | | Net cash used in financing activities | $(49,343) | $(66,223) | | Net decrease in Cash and cash equivalents | $(22,969) | $(10,127) | | Cash and cash equivalents at end of period | $27,704 | $29,071 | - Payments for acquisitions, net of cash acquired, significantly increased cash used in investing activities to **$24.8 million** in H1 2025 from **$0.2 million** in H1 2024[38](index=38&type=chunk) - Repurchases of common stock increased to **$44.6 million** in H1 2025 from **$14.4 million** in H1 2024[38](index=38&type=chunk) [Non-GAAP Reconciliations](index=10&type=section&id=Non-GAAP%20Reconciliations) This section provides detailed reconciliations of GAAP financial measures to their corresponding non-GAAP counterparts, including Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, and Adjusted Operating Expenses [Reconciliation of Net income to Adjusted EBITDA](index=10&type=section&id=Reconciliation%20of%20Net%20income%20to%20Adjusted%20EBITDA) This section provides a reconciliation of GAAP Net income to Adjusted EBITDA for the three and six months ended June 30, 2025, and 2024, detailing the specific adjustments made, such as interest expense, income tax, depreciation, amortization, stock-based compensation, and transaction-related items | Metric (in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------------ | :-------- | :-------- | :-------- | :-------- | | Net income | $7,009 | $11,381 | $4,996 | $12,165 | | Interest expense, net | $7,644 | $8,109 | $15,312 | $16,430 | | Income tax expense | $2,959 | $5,017 | $3,739 | $5,053 | | Depreciation and amortization | $24,873 | $27,571 | $51,912 | $54,936 | | Stock-based compensation, including related payroll tax expense | $6,758 | $8,813 | $15,461 | $16,763 | | Transaction-related and other one-time items | $4,022 | $(10,853) | $12,541 | $(3,684) | | Non-operating foreign exchange (gain) loss | $(2,367) | $387 | $(2,342) | $1,435 | | **Adjusted EBITDA** | **$50,898** | **$50,425** | **$101,619** | **$103,098** | [Reconciliation of Net income to Adjusted Net income](index=10&type=section&id=Reconciliation%20of%20Net%20income%20to%20Adjusted%20Net%20income) This reconciliation details the adjustments from GAAP Net income to Adjusted Net income for the three and six months ended June 30, 2025, and 2024, including stock-based compensation, amortization of intangible assets, transaction-related items, and their tax impacts | Metric (in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------------ | :-------- | :-------- | :-------- | :-------- | | Net income | $7,009 | $11,381 | $4,996 | $12,165 | | Stock-based compensation, including related payroll tax expense | $6,758 | $8,813 | $15,461 | $16,763 | | Amortization of intangible assets | $17,458 | $21,209 | $34,836 | $42,214 | | Transaction-related items | $2,736 | $(12,668) | $5,666 | $(6,525) | | Non-operating foreign exchange (gain) loss | $(2,367) | $387 | $(2,342) | $1,435 | | Other one-time items | $1,286 | $1,815 | $6,875 | $2,841 | | Income tax impact of adjustments | $(6,468) | $(4,889) | $(15,124) | $(14,182) | | **Adjusted net income** | **$26,412** | **$26,048** | **$50,368** | **$54,711** | | Adjusted net income per share, diluted | $0.41 | $0.38 | $0.78 | $0.81 | [Reconciliation of Net cash provided by operating activities to Free cash flow](index=10&type=section&id=Reconciliation%20of%20Net%20cash%20provided%20by%20operating%20activities%20to%20Free%20cash%20flow) This section reconciles Net cash provided by operating activities to Free cash flow for the three and six months ended June 30, 2025, and 2024, by subtracting capitalization of internally developed technology and purchase of property and equipment | Metric (in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------------ | :-------- | :-------- | :-------- | :-------- | | Net cash provided by operating activities | $26,228 | $35,254 | $55,683 | $68,722 | | Capitalization of internally developed technology | $(5,510) | $(5,871) | $(10,494) | $(11,176) | | Purchase of property and equipment | $(2,531) | $(391) | $(3,342) | $(1,099) | | **Free cash flow** | **$18,187** | **$28,992** | **$41,847** | **$56,447** | [Reconciliation of Operating expenses to Adjusted operating expenses](index=11&type=section&id=Reconciliation%20of%20Operating%20expenses%20to%20Adjusted%20operating%20expenses) This section provides detailed reconciliations of GAAP Operating expenses to Adjusted operating expenses for the three and six months ended June 30, 2025, and 2024, breaking down adjustments by expense category and highlighting the impact of transaction-related items and stock-based compensation | Expense Type | As Reported (Q2 2025) | Adjustments (1) | Stock-Based Compensation | As Adjusted | | :-------------------------- | :-------------------- | :-------------- | :----------------------- | :---------- | | Cost of revenue and operations | $30,547 | $0 | $(225) | $30,322 | | Product and technology | $28,634 | $0 | $(2,467) | $26,167 | | Marketing and sales | $57,757 | $(43) | $(1,583) | $56,131 | | General and administrative | $21,682 | $(3,978) | $(2,483) | $15,221 | | Depreciation and amortization | $24,873 | $0 | $0 | $24,873 | | **Total operating expenses** | **$163,493** | **$(4,021)** | **$(6,758)** | **$152,714** | | Expense Type | As Reported (H1 2025) | Adjustments (1) | Stock-Based Compensation | As Adjusted | | :-------------------------- | :-------------------- | :-------------- | :----------------------- | :---------- | | Cost of revenue and operations | $61,486 | $0 | $(403) | $61,083 | | Product and technology | $57,112 | $0 | $(4,980) | $52,132 | | Marketing and sales | $117,982 | $(85) | $(3,770) | $114,127 | | General and administrative | $47,566 | $(12,456) | $(6,308) | $28,802 | | Depreciation and amortization | $51,912 | $0 | $0 | $51,912 | | **Total operating expenses** | **$336,058** | **$(12,541)** | **$(15,461)** | **$308,056** | - Adjustments (1) include transaction-related items, unrealized gains and losses on foreign currency denominated transactions, severance, transformation and other exit costs, and write-off of long-lived assets and other[43](index=43&type=chunk)[46](index=46&type=chunk)

Core Insights - Cars.com Inc. reported a strong sequential increase in dealer customers, reaching 19,412, marking the best growth in over three years [1][3] - The company achieved a record of 27.8 million monthly average unique visitors and 332 million visits in the first half of 2025 [1] - The company repurchased 2.1 million shares, representing 3% of shares outstanding, and raised its FY 2025 share repurchase target to $70 to $90 million [1][9] Financial Performance - Total revenue for Q2 2025 was $178.7 million, roughly flat compared to the prior year [4][39] - Net income decreased by 38% year-over-year to $7.0 million, with adjusted net income slightly up by 1% to $26.4 million [3][39] - Adjusted EBITDA for Q2 2025 was $50.9 million, representing a 1% increase from the previous year [3][39] Operational Highlights - Average monthly unique visitors decreased by 8% quarter-over-quarter but increased by 2% year-over-year [40] - Traffic (visits) declined by 5% quarter-over-quarter but increased by 2% year-over-year [40] - Monthly average revenue per dealer (ARPD) was $2,435, down 2% year-over-year [40] Cost Management - Total operating expenses for Q2 2025 were $163.5 million, down from $169.4 million in the prior year [5] - Adjusted operating expenses decreased by 2% year-over-year to $152.7 million, reflecting cost efficiencies [5] Cash Flow and Balance Sheet - Net cash provided by operating activities for the first half of 2025 was $55.7 million, down from $68.7 million in the prior year [7] - Free cash flow for the same period totaled $41.8 million, compared to $56.4 million in the prior year [7] - Total debt outstanding was $460.0 million, with total liquidity of $317.7 million as of June 30, 2025 [8]

Core Viewpoint - CARS is currently in Phase 11 of its 18-Phase Adhishthana Cycle, indicating a need for patience despite its attractive value proposition [1] Group 1: Adhishthana Framework - The stock formed a structure known as the Adhishthana Cakra between Phases 4 and 8, typically indicating an arc or consolidation zone [2] - Instead of breaking out in Phase 9, CARS experienced a significant breakdown, leading to a sharp decline from the $20 zone to as low as $9 [4] - Currently in Phase 11, the structure suggests continued consolidation until the Guna Triads begin in Phase 14, which is necessary for a confirmed upward trend [4] Group 2: Monthly and Weekly Analysis - The monthly chart shows CARS in the latter part of Phase 2, known as the Buddhi Move, which is often bullish if the prior Sankhya period was formed correctly [7] - CARS did not collapse during its Sankhya period but traded within a wide range, allowing for the possibility of a Buddhi rally [8] - There is a timing mismatch as Phase 2 ends in March 2027, while the Guna Triads begin in May 2027, raising questions about the potential for a rally before the Guna Triads confirm long-term potential [8] Group 3: Investment Recommendations - The stock is currently bouncing between the $9 to $10 range, appearing to be a value buy, but the unclear weekly structure and unconfirmed Buddhi move complicate the investment decision [8] - Existing investors are advised to hold, especially those with long-term patience, while new investors should wait for structural confirmation likely after Phase 14 begins [9] - CARS is described as a car stuck in neutral, promising on paper but awaiting the right conditions to initiate a rally [9]

Core Viewpoint - Cars.com Inc. is set to report its financial results for Q2 2025 on August 7, 2025, with a conference call scheduled for the same day to discuss these results [1][2]. Group 1: Financial Reporting - The company will announce its financial results for the second quarter ended June 30, 2025, on August 7, 2025 [1]. - A conference call will be hosted by CEO Alex Vetter and CFO Sonia Jain at 8:00 a.m. CT/9:00 a.m. ET on the same day [2]. Group 2: Company Overview - Cars Commerce is an audience-driven technology company that empowers the automotive industry by simplifying car buying and selling through AI-driven technologies [3]. - The company's platform includes various products and solutions that enhance retail operations, including Cars.com, Dealer Inspire, AccuTrade, DealerClub, and Cars Commerce Media Network [3].