Financial Data and Key Metrics Changes - Revenue for the first quarter was $179 million, which was within the guidance range, but slightly down year over year [6][18] - Adjusted EBITDA was $51 million, resulting in an adjusted EBITDA margin of 28.3%, exceeding expectations [24][25] - Free cash flow was $24 million, with a share repurchase of $22 million during the quarter [27][28] - Net loss for the quarter was $2 million, compared to a net income of $1 million in the previous year [24] Business Line Data and Key Metrics Changes - Dealer revenue decreased by 2% year over year, attributed to a softer start for Marketplace and media products [18][19] - The number of dealers increased to 19,250, marking the best quarter of sequential organic customer growth since mid-2022 [9][25] - Accu Trade appraisal volume rose to over 813,000, a 16% increase quarter over quarter [12] - The solutions portfolio added over 100 new website customers, with over 70% coming from Dealer Inspire [20] Market Data and Key Metrics Changes - OEM revenue grew by 6% year over year, reflecting the value placed on the platform by automakers [9][15] - Average monthly unique visitors reached a record 29 million in Q1, with overall traffic up 1% year over year [10] - Traffic to news and editorial content increased by over 50% year over year, driven by resources like the American Made Index [11] Company Strategy and Development Direction - The company is focused on deepening product penetration and leveraging AI and data intelligence to meet industry demand [7] - The platform strategy combines a consumer marketplace with dealer software tools, aiming for diversified growth [6][7] - The company plans to enhance value delivery through product innovation and commercial leadership, particularly in the used car market [12][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged near-term uncertainty affecting the automotive outlook but emphasized the core value proposition of the platform [8] - The company is suspending full-year revenue guidance due to external visibility issues but expects Q2 revenue to be up year over year and quarter over quarter [29][30] - Management remains confident in the ability to drive full-year revenue growth through product adoption and innovation [30][31] Other Important Information - The company has demonstrated sustained cost discipline, with operating expenses up 3% year over year primarily due to severance costs [22][23] - Total liquidity was $321 million as of March 31, 2025, providing capacity for growth investments [28] Q&A Session Summary Question: Impact of tariffs on dealer and OEM spending - Management noted that tariffs have created uncertainty, affecting OEMs' commitments and dealer spending patterns, with some moving to month-to-month arrangements [34][37] Question: Growth in Accu Trade customer count - Management expressed confidence in Accu Trade's growth potential, noting increased dealer interest in sourcing inventory due to new car supply concerns [38][40] Question: Proactive measures taken for margin improvement - Management highlighted cost discipline and lower-than-expected integration costs for Dealer Club as factors contributing to improved EBITDA margins [46][48] Question: Visibility on media spending - Management indicated that while OEMs and dealers see value in media products, the timing of their spending has become more uncertain [55][76] Question: Revenue split between new and used vehicles - Management stated that approximately 15% to 20% of revenue is tied to new car traffic, with the majority being used vehicle-related [89]

Financial Data and Key Metrics Changes - Revenue for the first quarter of 2025 was $179 million, which was within the guidance range, but down slightly year over year [6][17] - Adjusted EBITDA was $51 million, resulting in an adjusted EBITDA margin of 28.3%, exceeding expectations due to cost discipline and lower integration costs [24][25] - Free cash flow was $24 million, down slightly year over year, reflecting adjusted EBITDA performance [27] - Net loss for the first quarter was $2 million, compared to a net income of $1 million in the previous year [23] Business Line Data and Key Metrics Changes - Dealer revenue decreased by 2% year over year, attributed to a softer start for Marketplace and media products [17] - The number of dealers increased to 19,250, marking the best quarter of sequential organic customer growth since mid-2022 [8][25] - Accu Trade appraisal volume rose to over 813,000, a 16% increase quarter over quarter [12] - The solutions portfolio added over 100 new website customers, with over 70% of those wins coming from Dealer Inspire [19] Market Data and Key Metrics Changes - OEM business grew by 6% year over year, reflecting the value automakers place on the high-quality audience [8][15] - Average monthly unique visitors reached a record 29 million in Q1, with overall traffic of 170 million visits, up 1% year over year [10] - Traffic to news and editorial content increased by more than 50% year over year, driven by resources like the American Made Index [11] Company Strategy and Development Direction - The company is focused on a platform strategy that combines a consumer marketplace with dealer software tools, aiming to deepen product penetration [7] - There is a strong emphasis on product innovation leveraging AI and data intelligence to simplify car buying and selling [7] - The company plans to enhance value delivery through new features and product packages, particularly in the Marketplace [12][26] Management's Comments on Operating Environment and Future Outlook - Management acknowledged near-term uncertainty affecting the automotive outlook but emphasized the core value proposition of the platform remains strong [7][16] - The company is suspending full-year revenue guidance due to external visibility issues but expects Q2 revenue to be up year over year and quarter over quarter [29][30] - Management expressed confidence in the ability to deliver consistent growth and long-term value creation despite market volatility [16][30] Other Important Information - The company repurchased approximately 1.6 million shares for $22 million in Q1, significantly ahead of its capital return commitment for the year [28] - Total liquidity was $321 million as of March 31, 2025, providing ample capacity for future investments [28] Q&A Session Summary Question: Impact of tariffs on dealer and OEM spending - Management noted that tariffs have created uncertainty, leading to a pullback in OEM commitments, with some moving to month-to-month spending [34][37] Question: Growth in Accu Trade customer count - Management expressed confidence in Accu Trade's growth potential, noting elevated interest from dealers in sourcing inventory differently [38][40] Question: Proactive measures taken in response to tariff news - Management highlighted cost discipline and lower integration costs as factors contributing to better-than-expected EBITDA margins [45][48] Question: Visibility on ad spending from OEMs and dealers - Management indicated mixed signals from both segments, with some dealers pulling back on media commitments while still investing in Marketplace [52][56] Question: Improvement in Marketplace business - Management attributed sequential improvement in Marketplace to increased consumer demand and dealer recognition of the growing market [60][62] Question: Timing of OEM commitments and ad spend - Management clarified that OEMs are currently managing their spending on a month-to-month basis due to uncertainty, impacting visibility [76][78]

Financial Performance - The company's Q1 2025 Adjusted EBITDA reached $50.721 million, with a margin of 28.3%, exceeding the guidance range of 25.5% to 27%[12, 46, 63] - Q1 2025 revenue was $179 million, slightly down year-over-year from $180 million in Q1 2024[12, 38] - The company repurchased 1.6 million shares in Q1 2025, spending $22 million, compared to $9 million in Q1 2024[12] - Adjusted net income for Q1 2025 was $23.956 million, compared to $28.663 million in Q1 2024[64] - Free cash flow for Q1 2025 was $23.660 million, compared to $27.455 million in Q1 2024[65] Key Metrics and Growth Drivers - Average monthly unique visitors reached 29 million in Q1 2025, a new quarterly record[14, 17, 52] - Total traffic (visits) was 170.1 million in Q1 2025[17, 52] - The company had 19,250 dealer customers, up approximately 40 QoQ[14, 48] - OEM and National revenue increased by 6% year-over-year[14, 32, 38] - AccuTrade appraisals grew 16% QoQ, powering over 813,000 appraisals in Q1[25] Outlook - The company projects an Adjusted EBITDA margin of 27% to 29% for Q2 2025[56] - The company anticipates an Adjusted EBITDA margin of 29% to 31% for the full year 2025[60] - The company plans to repurchase $60 to $70 million in shares for the full year 2025[60]

Q1 2025 Financial Highlights | (in thousands, except per share data) | Quarter Ended March 31, | | | | | | --- | --- | --- | --- | --- | --- | | | 2025 | | 2024 | | Change % | | Total Revenue | $ 179,024 $ | | | 180,176 | (1%) | | Net (loss) income | | (2,013) | | 784 | NM | | Adjusted net income | | 23,956 | | 28,663 | (16%) | | Adjusted EBITDA | | 50,721 | | 52,673 | (4%) | | Net (loss) income per diluted share | | (0.03) | | 0.01 | NM | | Adjusted net income per diluted share | | 0.37 | | 0.43 | (14%) | ...

Core Insights - Cars.com Inc. reported Q1 2025 revenue of $179 million, a slight decrease of 1% year-over-year, driven by a 6% growth in OEM and National revenue, while subscription-based Dealer revenue fell by 2% due to macroeconomic pressures [3][6] - The company achieved a record of 29 million average monthly unique visitors, reflecting strong engagement and adoption of its solutions [1][11] - Cars.com increased its dealer customer base to 19,250, indicating a positive trend in dealer engagement [1][11] Financial Performance - Total revenue for Q1 2025 was $179.0 million, down from $180.2 million in Q1 2024 [3][31] - Net loss for the quarter was $2.0 million, or $0.03 per diluted share, compared to a net income of $0.8 million, or $0.01 per diluted share in the prior year [8][32] - Adjusted net income decreased by 16% to $24.0 million, or $0.37 per diluted share, from $28.7 million, or $0.43 per diluted share a year ago [3][36] Operational Highlights - Average monthly unique visitors increased by 26% quarter-over-quarter and 3% year-over-year, reaching 29 million [5][11] - The company reported a 16% quarter-over-quarter growth in AccuTrade appraisals, indicating improved customer engagement [11] - DealerClub saw a 60% increase in active users and nearly doubled the volume of completed auctions from February to March 2025 [11] Cost Management - Total operating expenses for Q1 2025 were $172.6 million, up from $167.4 million in the prior year, influenced by the acquisition of DealerClub and higher severance costs [7][31] - Adjusted operating expenses remained flat at $155.3 million, reflecting disciplined cost management [7][38] Cash Flow and Balance Sheet - Net cash provided by operating activities was $29.5 million, down from $33.5 million in the prior year [9][33] - Free cash flow for the quarter totaled $23.7 million, compared to $27.5 million in Q1 2024 [9][37] - As of March 31, 2025, total debt outstanding was $460 million, with total liquidity of $321.4 million [10][10] Strategic Outlook - The company aims to reaccelerate dealer revenue growth in Q2 2025 through growth initiatives, including marketplace and website repackaging [2][14] - Full-year 2025 revenue guidance has been suspended due to macroeconomic uncertainties, but the company reaffirms its Adjusted EBITDA margin guidance of 29% to 31% [14][15]

Investment Rating - The report assigns an "Overweight" (OW) rating to General Motors (GM) and Ford, while Tesla and Rivian are rated "Underweight" (UW) [6][7]. Core Insights - The automotive industry is experiencing varied performance metrics across different companies, with GM and Ford showing potential upside in their stock prices, while Tesla and Rivian face significant downside risks [6][7]. - The report highlights the importance of valuation metrics such as EV/EBITDA, P/E ratios, and sales growth projections for assessing investment opportunities within the automotive sector [6][22]. Global Auto OEMs Investment Comparables - General Motors (GM) has a current price of $44.57 with a market cap of $43.067 billion and a target price of $53.00, indicating a 19% upside potential [6]. - Ford (F) is priced at $9.63 with a market cap of $38.294 billion and a target price of $11.00, representing a 14% upside [6]. - Ferrari (RACE) is valued at $439.97 with a target price of $460.00, showing a 5% upside [6]. - Tesla (TSLA) is currently priced at $241.37 with a target price of $120.00, indicating a -50% downside [6]. - Rivian (RIVN) has a price of $11.60 with a target price of $11.00, reflecting a -5% downside [6]. Global Auto Parts Suppliers Valuation Metrics - The average EV/EBITDA for US auto parts suppliers is projected at 1.8x for 2024, with a corresponding EBITDA margin of 12% [22]. - Aptiv (APTV) is rated "Overweight" with a current price of $51.71 and a target price of $102, indicating a 97% upside [22]. - Borg Warner (BWA) is rated "Overweight" with a price of $26.45 and a target price of $46, representing a 74% upside [22]. - Lear Corp (LEA) is rated "Overweight" with a price of $79.42 and a target price of $140, indicating a 76% upside [22]. Performance Metrics - The report indicates that the average revenue CAGR for US auto parts suppliers is projected to be 2% from 2023 to 2025 [74]. - The EBITDA margin for US auto parts suppliers is expected to be around 12% in 2025, with some companies showing higher margins [74][83]. - The report also highlights the financial returns of various suppliers, with some companies achieving significant returns on invested capital (ROIC) [54][56].

Financial Results Announcement - Cars.com Inc. expects to report its financial results for the first quarter ended March 31, 2025, on May 8, 2025 [1] - A conference call will be held at 8:00 a.m. CT/9:00 a.m. ET on the same day to discuss the results [1][2] Company Overview - Cars Commerce is an audience-driven technology company that empowers the automotive industry [3] - The company offers products and solutions that simplify car buying and selling, utilizing AI-driven technologies across various stages of the retail process [3] - The Cars Commerce platform includes four leading brands: Cars.com®, Dealer Inspire, AccuTrade, and Cars Commerce Media Network [3]

Core Insights - The automotive industry experienced a strong start in 2025, with new-vehicle sales increasing by 4.8% year over year in the first quarter, and March sales marked the sixth-highest in nearly 50 years, driven by pre-tariff buying, seasonal tax refunds, and automaker incentives [3][5]. Market Dynamics - Affordability concerns are rising as vehicles priced under $30,000 now represent only 14% of new-vehicle inventory, a significant drop from 38% during the 2019-21 period, indicating a reduced availability of budget-friendly models [3][4]. - The majority of sub-$30K vehicles (nearly 90%) are assembled outside the U.S., making them vulnerable to price hikes or production cuts due to shifting trade policies [4]. Inventory and Pricing - Inventory levels have improved, with new-car supply up 9% year over year, and vehicles are spending an average of 78 days on dealer lots, aligning with pre-pandemic norms [6]. - The average new-car price has remained around $49,000 for the past 18 months, which is still 30% higher than in Q1 2019, and the introduction of tariffs is expected to push prices higher [6]. Financing Conditions - Despite a 100 basis point cut in interest rates by the Federal Reserve between September and December 2024, auto-loan APRs increased by 19 basis points year over year in Q1, as lenders tightened credit terms amid market uncertainty, adding to affordability challenges for buyers [7][8].

Core Insights - Cars.com has released its 2025 Affordability Report, highlighting the best value new cars available to consumers in a changing market [1] - The report indicates that pending 25% tariffs on vehicles assembled outside the U.S. could significantly impact vehicle prices, with potential increases of $3,000 to $10,000 [2][3] - Current average new vehicle prices have remained steady at around $49,000, but are expected to rise if tariffs take effect as planned on April 3 [2] Industry Impact - The automotive industry is facing pressure from potential tariffs, which could lead consumers to act quickly to secure better deals [3] - Imports accounted for approximately 50% of U.S. vehicle sales in 2024, affecting even American-branded models [3] - Automakers like Ford, Hyundai, and Kia have increased their U.S.-based inventory by over 25% year over year in response to these market conditions [3] Best Value Vehicles - Cars.com identified the best value vehicles for model year 2025 based on price, safety features, fuel economy, and one-year fuel costs [4] - The report emphasizes vehicles made in the U.S. as potentially protected from rising tariff-related costs [4] - The best value vehicles by segment include: - Subcompact Car: Nissan Versa (SV) - Compact Car: Nissan Sentra (S) - Subcompact SUV: Chevrolet Trax (LS with Driver Confidence Package) - Compact SUV: Ford Escape (Active) - Mid-Size SUV: Kia Sorento (LX) - Compact Pickup Truck: Ford Maverick (XL with 2.5-liter hybrid engine) - Mid-Size Pickup Truck: Nissan Frontier (S 4x2 King Cab) - Full-Size Pickup Truck: Ford F-150 (XL 4x2 SuperCab) - Electric Vehicle: Hyundai Ioniq 6 (SE Long Range) [5]

Core Insights - Cars.com announced the winners of its Dealer of the Year Awards, recognizing top automotive dealers in North America based on over 1.3 million consumer reviews from 2024 [1][2] - Subaru, Acura, and Volvo were highlighted as the highest-rated brands, reflecting their strong overall reputation and consumer trust [9] Dealer Awards - The Dealer of the Year Awards are based on key metrics such as average star rating, total number of reviews, and dealer responsiveness to reviews [10] - Nearly 90% of the winning dealers actively respond to consumer reviews, compared to only 45% of non-winning dealerships, indicating a strong correlation between responsiveness and dealer success [2] Brand Reputation - Cars.com evaluates brand reputation across six categories: pricing transparency, trade-in experience, transaction speed, financing experience, review responsiveness, and vehicle inquiry responsiveness [9] - Subaru, Acura, and Volvo emerged as the top brands in terms of overall review ratings, showcasing their commitment to consumer experience [9] Consumer Insights - The platform emphasizes the importance of local dealerships in providing excellent consumer experiences, which are crucial for the automotive industry's success [2] - With over 13 million reviews available, Cars.com enables consumers to select the best dealerships while providing insights for dealers to improve operations [2]