Cars.com Inc. Q2 FY2025 earnings call

• Broad-based improvements across the business with strong execution on 2025 growth initiatives. - New commercial leadership increased sales velocity, with dealer count up 162 quarter-over-quarter. - Launched enhanced marketplace repackaging in June, with website repackaging advancing via completed OEM agreements. - Product innovation cycle gaining speed with new consumer AI features ramping quickly. - OEM and national revenue up 5% y-o-y despite tariff uncertainty. - Marketplace performance strong with traffic record and AI search driving leads. - Editorial dominance via Cars.com American-Made Index attracting more visitors. - Solutions suite: AccuTrade subscriber base grew to 1,070 dealers, DealerClub transaction volume up 50% sequentially with integration of AccuTrade appraisals into DealerClub auctions. - Dealer Inspire and D2C Media: Grew to nearly 7,800 websites with upgraded infrastructure for quick site deployments.

Revenue was $179 million, steady year-over-year. OEM and national revenue grew 5% year-over-year, partially offsetting temporary softness in dealer revenue. Dealer count grew both year-over-year and quarter-over-quarter. Adjusted EBITDA margin was 28.5% at the high end of the outlook. OEM and national revenue contributed 5% y-o-y growth. Dealer revenue faced temporary softness but dealer count increased. Solutions saw growth with AccuTrade subscriber base at 1,070 dealers and DealerClub transaction volume up 50% sequentially. Marketplace had traffic at a new Q2 record of 162 million, average monthly unique visitors 26.6 million, and AI search lead submission rates 2x higher than regular search.

• Anticipate low single-digit year-over-year revenue growth in the second half of 2025 and acceleration in 2026. - Raised full-year share repurchase target to $70 million to $90 million. - Reaffirm adjusted EBITDA margin outlook for fiscal 2025 between 29% to 31%.

• Uncertainty on second half new vehicle production and pricing forecasts affecting discretionary media spending. - Potential disintermediation risk from agentic AI, but Cars.com's content advantage mitigates this. - Churn risk with AccuTrade tied to individual dealership personnel rather than top-down mandates.

Q: Rajat Gupta asked about quantifying acceleration and ARPD.

A: Sonia Jain discussed sequential growth from Q2 to Q3 to Q4 due to repackaging and unit growth.

Q: Tom White asked about drivers of dealer revenue growth and ARPD.

A: Sonia Jain explained customer mix, product mix, and solutions-first customers impacting ARPD.

Q: Naved Khan asked about AccuTrade retention and marketplace repackaging timing.

A: Alex Vetter talked about AccuTrade retention tied to personnel and Sonia Jain discussed repackaging rolling out over next 2 quarters.

Q: Joseph Robert Spak asked about guidance cadence and OEM growth.

A: Sonia Jain discussed sequential acceleration and OEM growth as a tailwind.

Q: Gary Prestopino asked about AccuTrade appraisals conversion and dealer market sentiment.

A: Alex Vetter talked about AccuTrade benefits and improving dealer sentiment.

Q: Marvin Fong asked about sales velocity and dealer behavior by nameplate.

A: Alex Vetter discussed improved go-to-market motion and OEM behavior differences.