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Cars.com Inc. (CARS)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 revenue of $179.0M was down 1% YoY and slightly below S&P Global consensus ($179.79M), while adjusted diluted EPS of $0.37 missed consensus ($0.49); adjusted EBITDA margin of 28.3% exceeded the company’s Q1 margin guidance range (25.5%–27%) on disciplined costs and lower-than-anticipated DealerClub integration expense . Q1 2025 consensus values marked with * are from S&P Global.*
  • Dealer revenue fell 2% YoY on softer marketplace and media attach, partly offset by websites and appraisal tech; OEM & National grew 6% YoY, but management suspended FY25 revenue guidance citing tariff-driven timing volatility in media spend; FY25 adjusted EBITDA margin guidance reaffirmed at 29%–31% .
  • Marketplace engagement hit records (29.0M avg monthly UVs; 170.1M visits), dealer count rose sequentially to 19,250, and AccuTrade appraisals hit 813k (+16% q/q, +31% y/y), underpinning confidence in Dealer revenue reacceleration in 2025 .
  • Stock narrative catalysts: revenue guidance suspension (macro/ tariff uncertainty) as an overhang; margin resilience and record marketplace engagement as offsets; management expects Q2 revenue up YoY and QoQ and Q2 adjusted EBITDA margin of 27%–29% .

What Went Well and What Went Wrong

  • What Went Well

    • Adjusted EBITDA margin 28.3% topped guidance, driven by cost discipline and lower-than-expected DealerClub integration costs; free cash flow was $23.7M and the company repurchased 1.6M shares for $21.5M in Q1 .
    • Audience and marketplace momentum: record 29.0M avg monthly UVs (+3% YoY), 170.1M visits, and sequential dealer count growth to 19,250; OEM revenue +6% YoY supported by high-quality in-market audience .
    • Solutions traction: >100 new website customers added; AccuTrade appraisals 813k (+16% q/q, +31% y/y); DealerClub users +60% with nearly 2x completed auctions from Feb to Mar and early workflow integrations (one-click appraisal-to-auction) .

  • What Went Wrong

    • Revenue down 1% YoY and slightly below consensus; adjusted diluted EPS ($0.37) below consensus ($0.49), reflecting marketing/media pressure and severance costs tied to targeted headcount reductions . Q1 2025 consensus values marked with * are from S&P Global.*
    • Media visibility deteriorated as some OEMs shifted to month-to-month commitments and dealers curtailed discretionary media (e.g., video), prompting suspension of FY25 revenue guidance .
    • Dealer ARPD edged down 1% YoY to $2,473 on mix; subscription Dealer revenue declined 2% YoY amid macro-driven pressure on dealer ad budgets .

Financial Results

Quarterly trend (Income statement and profitability)

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$180.18 $180.43 $179.02
GAAP Diluted EPS ($)$0.01 $0.26 $(0.03)
Adjusted Diluted EPS ($)$0.43 $0.49 $0.37
Adjusted EBITDA ($USD Millions)$52.67 $55.49 $50.72
Adjusted EBITDA Margin (%)—30.8% 28.3%

Q1 2025 vs S&P Global consensus

MetricQ1 2025 ActualQ1 2025 Consensus
Revenue ($USD Millions)$179.02 $179.79*
Primary EPS ($)$0.37 $0.49*

Values marked with * retrieved from S&P Global.

Segment revenue breakdown

Metric ($USD Millions)Q1 2024Q4 2024Q1 2025
Dealer$161.82 $159.55 $159.14
OEM & National$15.31 $17.75 $16.28
Other$3.05 $3.14 $3.60
Total Revenue$180.18 $180.43 $179.02

Key KPIs

KPIQ1 2024Q4 2024Q1 2025
Avg Monthly Unique Visitors (Millions)28.3 23.1 29.0
Visits (Millions)171.4 143.8 170.1
ARPD ($)2,505 2,475 2,473
Dealer Customers19,381 19,206 19,250

Cash flow and balance sheet

MetricQ1 2024Q4 2024Q1 2025
Net Cash from Operating Activities ($MM)$33.47 $30.01 (Q4) $29.46
Free Cash Flow ($MM)$27.46 $24.44 (Q4) $23.66
Total Debt Outstanding ($MM)—$460.0 $460.0
Total Liquidity ($MM)—$340.7 $321.4
Share Repurchases—2.8M shs in 2024 1.6M shs; $21.5MM

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$745–$755MM (Q4 guide) Suspended (will update when visibility improves) Suspended
Adjusted EBITDA MarginFY 202529%–31% 29%–31% (reaffirmed) Maintained
Adjusted EBITDA MarginQ2 2025—27%–29% New
RevenueQ2 2025—Expected up YoY and QoQ (qualitative) New qualitative color
Adjusted EBITDA Margin vs GuideQ1 202525.5%–27% Actual 28.3% Beat prior guide
Share RepurchasesFY 2025Target $60–$70MM Target $60–$70MM (reaffirmed) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Tariffs/Macro & Media VisibilityStrong OEM & National growth (+17% YoY) and robust media demand in Q3/Q4; outlook constructive for OEM media OEMs shifting to month-to-month; some dealer media pullback; FY25 revenue guidance suspended due to timing volatility Worsening visibility
AI/Data-driven product innovationOngoing product enhancements into 2025 Adding data intelligence into leads; improving attribution/analytics; bundling features in marketplace packages Improving
AccuTrade adoption/usage950 subscribers (Q3), ~1,000 (Q4) 813k appraisals (+16% q/q, +31% y/y); top quartile acquired ~50 cars via service lane in Feb/Mar Strengthening
DealerClub integrationNewly acquired; closed Jan 2025 Active users +60% and auctions nearly doubled Feb→Mar; one-click push from AccuTrade Accelerating
Marketplace scale/healthUVs 24.5M (Q3), 23.1M (Q4) Record UVs 29.0M; visits 170.1M; marketplace customers grew in Feb/Mar Improving
Websites (Dealer Inspire/D2C Media)Canada #1 provider; stable growth >100 net adds in Q1; renegotiating legacy DI agreements Improving

Management Commentary

  • “We gained share in each of our end markets… Dealer count rose to 19,250… record marketplace metrics… OEM business grew 6% year-over-year” — Alex Vetter, CEO .
  • “We are suspending full year 2025 revenue guidance… [but] reaffirming full year adjusted EBITDA margin guidance of 29% to 31%” — Company release and 8-K .
  • “Adjusted EBITDA margin… exceeded our first quarter guidance range… we have confidence that our asset-light model and robust balance sheet and free cash flow generation put us in a strong position” — Sonia Jain, CFO .
  • On solutions: “AccuTrade enables service lane acquisitions… as much as $2,700 in additional profit per unit… DealerClub… transparent… alternative to traditional wholesale auctions” — CEO .

Q&A Highlights

  • Tariffs and spend timing: Consumers pulled forward purchases; dealers steady on marketplace but trimming discretionary media; OEMs moving to month-to-month, making media timing harder to predict near term .
  • Margin upside drivers: Cost discipline; DealerClub integration costs lower than planned; targeted headcount reductions to refocus priorities (benefit more in future quarters) .
  • DealerClub/AccuTrade monetization and adoption: Rapid prospect pipeline for DealerClub (~2,500); integration with AccuTrade enables one-click auction listing; AccuTrade endorsements expected to impact Q2 more than Q1 .
  • Mix/Exposure: ~15%–20% of revenue tied to new-car oriented traffic; roughly one-third of marketplace mix is independent dealers; used-car focus supportive for AccuTrade and DealerClub .

Estimates Context

  • Q1 2025 performance vs S&P Global consensus: Revenue $179.0M vs $179.8M* (slight miss); Primary EPS $0.37 vs $0.49* (miss). Company adjusted EBITDA margin (28.3%) beat its own Q1 guidance range (25.5%–27%) . Values marked with * retrieved from S&P Global.
  • Outlook context: Management expects Q2 revenue up YoY and QoQ with adjusted EBITDA margin 27%–29%; FY25 revenue guidance suspended, but FY25 adjusted EBITDA margin 29%–31% reaffirmed .

Key Takeaways for Investors

  • Quality of earnings: Despite top-line softness and EPS miss vs Street*, Q1 margin execution was strong and ahead of guide, underscoring operating leverage and cost control . Values marked with * retrieved from S&P Global.
  • Narrative shift: Media timing uncertainty (tariffs) is the principal overhang; management proactively suspended FY revenue guidance to reflect reduced visibility while maintaining margin targets .
  • Leading indicators positive: Record marketplace engagement, sequential dealer growth, and strong AccuTrade/DealerClub adoption support an improving Dealer revenue trajectory into 2H25 .
  • Mix sensitivity: New-car exposure in OEM & National makes ad timing sensitive; used-car tilt via AccuTrade/DealerClub mitigates risk and provides counter-cyclical drivers .
  • Capital returns: Active buybacks (1.6M shares in Q1) and 2025 target $60–$70M signal confidence and support per-share compounding amid near-term top-line uncertainty .
  • Near-term setup: Q2 revenue expected up YoY and QoQ with 27%–29% margin; watch OEM media pacing, dealer media attach rates, and continued solutions wins as stock catalysts .
  • Macro lens: Company’s Q1 industry insights highlight affordability pressure and tariff impacts even as March sales were strong; sustained audience leadership positions CARS to capture shifting demand .

Notes:
Values marked with * retrieved from S&P Global.