Cars.com Inc. Q1 FY2025 earnings call

• Delivered solid first quarter with revenue within guidance range and adjusted EBITDA exceeding the high end of expected range. Strong free cash flow enabled $22 million share repurchase. • Platform strategy combining consumer marketplace and dealer software tools is crucial for diversified growth. Gained share in end markets, with dealer count rising to 19,250. • Solutions portfolio added over 100 new website customers and AccuTrade subscribers. Consumer traffic was strong with record unique visitors, and OEM business grew 6% year over year. • Dealer Club showed strong growth in the first two months of integration, with active users up 60% and transaction volume nearly doubling from February to March.

Revenue for the first quarter was $179 million. The solutions portfolio was a key area: Dealer Inspire and D2C Media added over 100 new website customers in Q1. AccuTrade appraisal volume was up over 813,000 appraisals in Q1, a substantial 16% quarter over quarter. Dealer Club increased active users by 60% and nearly doubled its volume of completed transactions from February to March. OEM and national business saw Q1 revenue up 6% year over year.

• Suspended full-year revenue guidance due to market uncertainty. • Expect Q2 revenue to be up year over year and quarter over quarter. • Adjusted EBITDA margin for Q2 2025 is expected to be between 27 - 29%, and for fiscal 2025 between 29 - 31%.

• Near-term uncertainty affecting the automotive outlook. • OEM media spending trend may persist, putting pressure on new car sales. • Uncertainty in the timing of media investment from OEMs and dealers.

Q: Understanding the impact of tariffs on different players.

A: Tariffs pulled forward consumer demand, resulting in strong traffic trends. On the dealer side, positive sentiment is seen, but the OEM side has mixed signals.

Q: Follow-up on AccuTrade growth.

A: There is elevated interest in AccuTrade, though onboarding takes time, inbound interest is strong.

Q: Margin upside in Q1.

A: Cost discipline and lower integration costs associated with the Dealer Club acquisition contributed to the margin upside.

Q: Second quarter revenue guidance.

A: There are mixed signals on dealer and OEM spending, but Q2 is expected to have revenue growth.

Q: Dealer count and Dealer Club.

A: Reported dealer count doesn't include Dealer Club as it's a transactional business for now.

Q: AccuTrade and Dealer Club progress.

A: Dealer Club is growing at 60% month over month, and integration with AccuTrade improves efficiency.

Q: OEM and national visibility.

A: Timing of media spend is shifting, but the quality of the audience remains strong.

Q: Visibility on ad side.

A: The subscription side is confident, but the media side has uncertainty.

Q: New vs used revenue split.

A: Roughly a third of the marketplace mix is independent dealers, and revenue mimics vehicle sales volumes between new and used.