Core Insights - The article highlights that 44% of consumers are using AI-powered car search tools, indicating a significant shift in how Americans shop for vehicles [1][2] - The survey results show that 97% of consumers believe AI will influence their purchase decisions, marking a new era in auto retail [2] Consumer Behavior and Preferences - Approximately 73% of AI users find it saves time by converting conversational queries into targeted search results, while two-thirds desire an AI-powered personal car shopping assistant [2] - 71% of respondents trust AI tools for unbiased and accurate vehicle information, but 63% express concerns about potential biases in AI recommendations [3] Post-AI Search Actions - After using AI tools, 41% of shoppers are likely to visit a dealer or manufacturer's website, and 64% are open to additional recommendations from salespeople [4] - Most consumers prefer transitioning from AI tools to direct dealer interaction for budget and financing discussions when nearing a purchase [4] Impact of Carson - Carson, the AI tool launched by Cars.com, has shown strong engagement, with users returning to the site twice as often as other shoppers and saving three times more vehicles [5] - Carson currently assists about 15% of web and mobile searches on Cars.com and is continuously evolving with new features [5] Industry Positioning - Cars.com is positioned as a leader in automotive innovation, promising a more efficient and user-friendly experience for consumers and dealerships [6]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $181.6 million, reflecting a 1% year-over-year increase, aligning with expectations for low single-digit growth in the second half of the year [16] - Adjusted EBITDA for Q3 was $55 million, a 7% year-over-year increase, with an adjusted EBITDA margin of 30.1%, demonstrating strong revenue flow-through and cost management [22][21] - Net income for Q3 was $7.7 million, or $0.12 per diluted share, compared to $18.7 million, or $0.28 per diluted share, a year ago, primarily due to changes in the fair value of contingent consideration for prior acquisitions [21] Business Line Data and Key Metrics Changes - Dealer revenue increased by 2% year-over-year, driven by successful repackaging activities and an increase in customer count [16] - The marketplace continues to be the largest contributor to dealer count growth, with over 300 net new dealer customers added since the start of the year [17] - AccuTrade and Dealer Club saw significant growth, with AccuTrade surpassing 1 million quarterly appraisals and Dealer Club increasing active users by nearly 40% quarter-over-quarter [11][12] Market Data and Key Metrics Changes - The average monthly visitors to the marketplace reached 25.4 million, up 4% year-over-year, with total traffic year-to-date at 488 million visits, setting a new record [7] - OEM and national revenue was down 5% year-over-year, primarily due to reduced spending from two OEM partners, although the overall OEM revenue pipeline remains strong [13][18] Company Strategy and Development Direction - The company is focused on 2025 growth initiatives, including enhancing dealer engagement through new sales leadership and improved go-to-market strategies [5] - The phased marketplace repackaging exercise aims to align pricing with product value, helping dealers drive more leads per listing [6] - AI integration is central to the company's product innovation roadmap, enhancing the shopping experience for consumers and improving lead conversion for dealers [8][9] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's ability to grow OEM revenue despite near-term headwinds, citing strong enthusiasm for the audience and dealer adoption [31] - The company reaffirmed expectations for low single-digit revenue growth in the second half of 2025, driven by continued execution of growth initiatives [26] - Adjusted EBITDA margin outlook for fiscal 2025 is between 29%-31%, reflecting disciplined cost management and high contribution margins from pricing initiatives [26] Other Important Information - The company has utilized over two-thirds of free cash flow for share buybacks, totaling $64 million year-to-date, with a full-year repurchase target raised to $70 million-$90 million [24][25] - Total liquidity was reported at $350 million as of September 30, 2025, providing ample capacity for capital allocation priorities [25] Q&A Session Summary Question: Drivers of revenue in Q3 and dealer navigation of the current industry backdrop - Management noted that while there are near-term headwinds for manufacturers, enthusiasm for the audience remains strong, and dealers are increasingly recognizing the value of the platform [30][31] Question: Insights on repackaging and its impact on ARPD - Management highlighted that repackaging has led to sequential momentum in ARPD, with premium-plus packages showing significant adoption [36][37] Question: Competitive landscape changes and capital allocation priorities - Management indicated that while the competitive landscape is evolving, the company's platform strategy remains differentiated, focusing on driving down dealer advertising costs [44][47]

Core Insights - Cars.com Inc. achieved record total revenue of $182 million in Q3 2025, with dealer revenue growing by 2% year-over-year [1][5] - The company expanded its customer base by 271 year-over-year, reaching 19,526 dealer customers, supported by the launch of AI-powered search features [1][4] - The company repurchased $64 million of stock year-to-date, on track to meet its target of $70 to $90 million for FY25 [1][10] Financial Performance - Total revenue for Q3 2025 was $181.6 million, a 1% increase from $179.7 million in Q3 2024 [3][5] - Net income decreased to $7.7 million, or $0.12 per diluted share, down 59% from $18.7 million, or $0.28 per diluted share in the prior year [7] - Adjusted net income rose by 10% to $30.4 million, or $0.48 per diluted share, compared to $27.7 million, or $0.41 per diluted share a year ago [3][7] Operational Highlights - Average monthly unique visitors increased to 25.5 million, a 4% year-over-year growth [4] - The company reported a 1% increase in traffic, totaling 156.2 million visits [4] - Monthly average revenue per dealer (ARPD) was $2,460, reflecting a 1% increase quarter-over-quarter but a 1% decrease year-over-year [4] Cost Management - Total operating expenses decreased to $164.8 million from $168.2 million in the prior year, with adjusted operating expenses down 4% to $150.4 million [6][7] - Adjusted EBITDA for Q3 2025 was $54.6 million, representing 30.1% of revenue, an increase from 28.5% in the previous year [7] Cash Flow and Balance Sheet - Net cash provided by operating activities for the nine-month period ended September 30, 2025, was $114.5 million, down from $122.5 million in the prior year [8] - Free cash flow for the same period totaled $94.5 million, compared to $103.7 million in the previous year [8] - Total debt outstanding was $455 million, with a net leverage ratio of 1.9x, below the target range of 2.0x to 2.5x [9] Shareholder Returns - The company repurchased 1.5 million shares for $19.3 million in Q3, totaling 5.2 million shares for $63.9 million year-to-date [10] - The company reaffirmed its target for share repurchases of $70 to $90 million for fiscal 2025 [10][11] Future Outlook - The company anticipates low-single digit revenue growth for the second half of 2025, based on current market conditions and execution of growth initiatives [12] - Full-year adjusted EBITDA margin guidance remains at 29% to 31%, reflecting confidence in managing operating levers [13]