09-05-2025
Cars.com Inc (CARS) Q1 2025 Earnings Call Highlights: Strong Dealer Growth and Strategic Share ...
Revenue: $179 million for Q1 2025, within guidance range.
Adjusted EBITDA: $51 million, with a margin of 28.3%.
Net Loss: $2 million or negative $0.03 per diluted share.
Adjusted Net Income: $24 million or $0.37 per diluted share.
Operating Expenses: $173 million, up 3% year over year.
Dealer Count: 19,250, up more than 40 dealers quarter over quarter.
Free Cash Flow: $24 million for Q1 2025.
Share Repurchase: $22 million worth of shares repurchased in Q1.
OEM and National Revenue: Up 6% year over year.
Accutrade Appraisals: 813,000 appraisals in Q1, up 16% quarter over quarter.
ARPD: $2,473, roughly flat quarter over quarter.
Total Liquidity: $321 million as of March 31, 2025.
Warning! GuruFocus has detected 2 Warning Sign with CARS.
Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Inc (NYSE:CARS) reported a solid first quarter with revenue of $179 million, within their guidance range.
The company exceeded expectations with their adjusted EBITDA margin, showcasing strong cost discipline.
Inc (NYSE:CARS) repurchased $22 million of shares, demonstrating a commitment to returning capital to shareholders.
The company saw a significant increase in dealer count, reaching 19,250 dealers, marking the best quarter of sequential organic customer growth since mid-2022.
Accutrade appraisal volume increased by 16% quarter over quarter, indicating strong adoption and usage among dealers.
First quarter revenue was down slightly year over year, reflecting challenges in the marketplace and media products.
There is uncertainty in OEM and dealer ad spending due to tariff impacts, leading to a suspension of full-year revenue guidance.
The company experienced a net loss of $2 million for the first quarter, primarily due to severance-related costs.
OEMs are managing their media commitments more closely, creating uncertainty in media revenue.
The company noted a pullback in discretionary media spending from dealers, impacting ancillary media solutions.
Q: Understanding the impact of tariffs on dealer and OEM ad spending and used car volumes. How significant is the uncertainty in these areas? A: Alex Vetter, CEO: The tariff news has increased consumer demand, with more traffic to our marketplace as consumers look to secure deals before tariffs impact prices. Dealers are leaning into technologies like Accutrade and Dealer Club to source used cars due to concerns about new car supplies. However, OEMs are more unpredictable, with some moving to month-to-month commitments, creating uncertainty in our full-year outlook.
Q: How should we think about the growth in Accutrade customer accounts, given recent endorsements? A: Alex Vetter, CEO: We are confident in Accutrade's growth potential, with increased dealer interest due to concerns about new car supply. While onboarding and training take time, the top quartile of dealerships are acquiring 50 cars a month using our software, indicating strong potential for further adoption. Sonia Jain, CFO, added that the impact of endorsements is expected to be more visible in Q2.
Q: What drove the margin upside in Q1 compared to initial expectations? A: Sonia Jain, CFO: We focused on cost management, with Dealer Club integration costs coming in lower than planned. General cost discipline and a targeted headcount reduction also contributed, though the latter's benefits will be more visible in future quarters.
Q: Can you explain the mixed signals from dealers and OEMs regarding media spending, and how does this affect Q2 revenue expectations? A: Alex Vetter, CEO: Dealers are pulling back on discretionary media spending but remain committed to our marketplace. OEMs are moving to month-to-month commitments, creating uncertainty. Despite this, we expect Q2 revenue to be up year-over-year, driven by strong marketplace and solutions growth.
Q: With the positive activity around Accutrade and Dealer Club, how quickly can prospects be converted, and is there a monetization opportunity? A: Alex Vetter, CEO: Dealer Club is seeing rapid growth, with 2,500 prospects and a 60% monthly increase in transactions. We are focusing on integration with Accutrade to enhance efficiency. While we are not charging sellers currently, the synergy with our platform positions us well for future monetization opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
