Cars.com(US:CARS)2022-05-07 12:55Financial Data and Key Metrics Changes - Revenue totaled $158 million, a 3% increase compared to the prior year [19] - Dealer revenue grew 6% to $140 million, driven by a 4% growth in dealer customers and a 1% growth in ARPD [19] - Net income for the quarter was $4 million or $0.06 per diluted share, compared to $5 million or $0.08 per diluted share a year ago [21] - Adjusted EBITDA was $42 million, representing 27% of revenue [21] - Total operating expenses were $147 million, up from $137 million a year ago [21] - Free cash flow was $26 million, $18 million lower than the first quarter last year [24] Business Line Data and Key Metrics Changes - Dealer Inspire revenue grew 15% year-over-year [23] - Leads to dealers grew double digits, while unique visitors increased 2% compared to a year ago [11] - The number of dealer customers reached 19,500, the highest in over three years, with an increase of 677 compared to last year [8][22] - Website customers increased to 5,500, up 800 from a year ago [22] Market Data and Key Metrics Changes - Average retail prices for new and used vehicles listed on Cars.com increased 27% and 37% respectively compared to the prior year [7] - Inventory searches for electric vehicles (EVs) were up nearly 200% year-over-year [12] - SEO traffic for the new EV landing page increased nearly 400% in March over the prior month [12] Company Strategy and Development Direction - The company is focused on expanding its dealer base and enhancing its digital solutions to meet dealer needs [8][13] - New product launches, such as Accu-Trade and CreditIQ, are expected to drive future revenue growth [15][17] - The company aims to maintain strong cash flow while investing in marketing and technology solutions [37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering solid growth despite macroeconomic headwinds, including inventory shortages and inflation [20][27] - The expectation for revenue growth between 6% and 8% for the full year was reaffirmed, with double-digit growth anticipated in the fourth quarter [27] - Adjusted EBITDA margin is expected to approach 30% by the fourth quarter as revenue growth accelerates [28] Other Important Information - The company borrowed $45 million on its revolver, resulting in total debt outstanding of $520 million at quarter end [24] - The company initiated a share repurchase program, buying 338,000 shares for a total of $5 million [25] Q&A Session Summary Question: Thoughts on dealer customer growth and future strategy - Management noted strong dealer growth and the opportunity to add more dealers through a range of solutions [32] Question: Conversations with dealers in the current environment - Management confirmed constructive conversations with dealers, who are eager to shift towards technology solutions despite inventory challenges [35] Question: Differentiation of Accu-Trade from competitors - Accu-Trade offers integrated solutions that reduce the need for multiple vendors, providing precise VIN-specific valuation capabilities [42] Question: Impact of dealer inventory dynamics on marketplace revenue - Management indicated that while new car inventory is down, the used car business remains robust, which supports marketplace revenue [47] Question: Outlook for EBITDA margin and OEM ad spend - Management expects OEM revenue to stabilize rather than grow significantly, impacting EBITDA margins [49] Question: Clarification on ARPD for core listings business - Management confirmed that ARPD for the core marketplace was slightly down year-over-year, but overall ARPD was up due to growth in solutions [50]