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]

Summary of Cars.com (CARS) FY Conference Call - May 13, 2025 Industry Overview - The automotive industry is described as resilient, with a historical ability to recover from economic downturns, evidenced by sales figures during past recessions [3][4] - The shift towards digital solutions is emphasized, with consumers moving ahead of the industry in adopting online platforms for car shopping [6] Company Performance - Cars.com has seen improving core business trends, with solid dealer growth reported in February, March, and April [4][10] - The company powers over 8,000 retail websites and generates subscription or SaaS-based revenue from various ecosystem participants [5] - The marketplace caters to both new and used car shoppers, with a significant portion of traffic coming from undecided consumers [16][12] Revenue and Growth Insights - Revenue guidance has been suspended due to uncertainty, but EBITDA margin guidance remains intact, supported by strong dealer and consumer fundamentals [16][19] - OEMs are shifting budgets towards digital solutions, which could positively impact Cars.com’s revenue once supply chain issues are resolved [21][22] - The company expects year-over-year growth despite variability in quarterly performance [19] Competitive Landscape - Cars.com differentiates itself through brand strength and expertise, providing curated inventory and insights to consumers [29][30] - The company is focused on deepening its software solutions and tools for dealers, enhancing the value proposition beyond just a marketplace [31] New Initiatives - The introduction of Accu Trade allows dealers to appraise vehicles in real-time, facilitating better inventory management [15][54] - The Dealer Club initiative aims to create a reputation-based wholesale marketplace, attracting significant interest from dealers [53][54] Capital Allocation - The company is leaning into share buybacks, with a strong performance in Q1 indicating a potential annualized buyback of $90 to $100 million [66][67] - Current stock valuations are viewed as attractive for buybacks, suggesting a proactive approach to capital allocation [66] Key Takeaways - The automotive market is expected to remain healthy despite external challenges, with Cars.com positioned to capitalize on digital trends and dealer needs [64] - The company is optimistic about future growth, particularly with new initiatives like Dealer Club and Accu Trade, which are expected to enhance dealer engagement and revenue streams [59][60]

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]