Cars.com Inc (CARS) Q4 2024 Earnings Call Highlights: Record Revenue and Strategic Growth ...
Full Year Revenue: $719 million, up 4% year over year.
Fourth Quarter Revenue: $180.4 million, a new quarterly record.
OEM and National Revenue Growth: Up 15% year over year in Q4.
Free Cash Flow: $128 million, reaching a multi-year high.
Adjusted EBITDA: $55 million for Q4, with a margin of 30.8%.
Net Income for Q4: $17 million or $0.26 per diluted share.
Adjusted Net Income for Q4: $33 million or $0.49 per diluted share.
Dealer Counts: 19,206 dealer customers, down 49 dealers quarter over quarter.
ARPD (Average Revenue Per Dealer): $2,475, effectively flat quarter over quarter.
Share Repurchase: 2.8 million shares for $49 million in 2024.
Total Debt Outstanding: $460 million as of December 31, 2024.
Total Liquidity: $341 million as of December 31, 2024.
2025 Revenue Guidance: $745 million to $755 million.
2025 Adjusted EBITDA Margin Guidance: 29% to 31%.
Warning! GuruFocus has detected 4 Warning Signs with CARS.
Release Date: February 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Cars.com Inc (NYSE:CARS) achieved record full-year revenue of $719 million in 2024, marking a 4% year-over-year increase.
The company reported a multi-year high in free cash flow at $128 million, showcasing strong operating discipline.
OEM and National revenue outperformed expectations, growing 15% year-over-year in Q4, the best quarterly revenue since 2021.
AccuTrade reached over 1,000 dealerships, with appraisal volume up 35% year-over-year, indicating strong dealer adoption.
The acquisition of DealerClub positions Cars.com Inc (NYSE:CARS) to enter the $10 billion wholesale market, enhancing platform capabilities.
Dealer revenue was slightly down year-over-year in Q4, with some pressure on dealer advertising revenue.
Marketplace performance experienced seasonal softness, with elevated churn and fewer upgrades affecting dealer accounts and ARPD.
Q1 2025 adjusted EBITDA margin is expected to be lower year-over-year due to investments in DealerClub integration.
The company anticipates some pressure from targeted rate increases, which may elevate churn in the near term.
Despite strong consumer metrics, dealer revenue expectations for Q1 2025 are based on a slightly down year-over-year exit rate from Q4.
Q: Can you discuss the full-year revenue guidance and the expected impact of DealerClub on 2025 revenue? A: Sonia Jain, CFO: We expect two-thirds of our incremental growth in 2025 to come from dealer revenue, including marketplace and upsells like websites, AccuTrade, and media products. DealerClub's revenue contribution is not heavily factored in as we focus on integration, but we are optimistic about its potential impact later in the year.
Q: What happened to dealer revenues in the fourth quarter, and what are the expectations moving forward? A: Alex Vetter, CEO: We experienced seasonal softness in Q4, with some pullback in media solutions as inventory levels normalized. However, we are seeing good momentum in Q1 as inventory levels have returned to normal, similar to prior cycles.
Q: How is AccuTrade performing, and what are the expectations for its growth? A: Alex Vetter, CEO: AccuTrade showed strong momentum in Q4, with appraisal volume up 13% from Q1 to Q4. Dealers are increasingly using AccuTrade for vehicle appraisals and acquisitions. OEM endorsements are expected to drive further growth, particularly in the second half of the year.
Q: Can you explain the margin guidance for 2025 and the impact of DealerClub on margins? A: Sonia Jain, CFO: Q1 margins reflect the Q4 exit rate and investments in DealerClub integration. We expect margins to improve throughout the year as revenue grows and DealerClub integration progresses. The full-year margin expansion is driven by natural flow-through benefits from our platform strategy.
Q: How are you incorporating macroeconomic uncertainties, such as tariffs, into your full-year guidance? A: Sonia Jain, CFO: We assume a relatively stable macro environment and are actively monitoring key indicators like consumer affordability and interest rates. Our initiatives for the back half of the year, including repackaging and bundling, are expected to strengthen value delivery and retention.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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