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Cars.com Inc. (CARS)·Q3 2025 Earnings Summary

Executive Summary

  • Record revenue of $181.6M, a slight beat vs consensus ($181.37M*) and sequentially higher vs Q2; Adjusted EPS of $0.48 was essentially in line/slightly below consensus ($0.487*), while Adjusted EBITDA margin expanded to 30.1% .
  • Dealer revenue grew 2% YoY on Marketplace adoption and repackaging; OEM and National revenue fell 5% YoY due to two OEMs’ internal agency changes and lower late-quarter media spend .
  • Guidance maintained: H2 2025 low-single digit revenue growth; FY25 Adjusted EBITDA margin 29%–31%; share repurchase target reaffirmed at $70–$90M .
  • Operational catalysts: dealer count at 19,526 (+271 YoY), Carson AI driving 2x listing views and 3x vehicles saved, and AccuTrade surpassing 1M quarterly appraisals; buybacks reached $63.9M YTD, with liquidity of $350.1M and net leverage at 1.9x .

What Went Well and What Went Wrong

What Went Well

  • Dealer revenue reaccelerated (+2% YoY) and Adjusted EBITDA margin expanded to 30.1%, aided by cost discipline (“strong operating leverage”) .
  • AI-driven product momentum: Carson AI “yielding a 2x improvement in visitor engagement,” with users saving 3x more vehicles and viewing 2x listings; mobile app integration next .
  • Marketplace repackaging success: Premium subscribers +~60% YoY; Premium+ bundles media and grew 50% MoM from September to October; ARPD rose sequentially (+1% QoQ) .
  • CEO: “We delivered record revenue… triple-digit growth in customer count… Carson… yielding a 2x improvement” .
  • CFO: “Third quarter… produced our highest quarter of Adjusted EBITDA margin for this year… robust cash flow generation also enabled additional share repurchases” .
  • AccuTrade scale: >1M quarterly appraisals; DealerClub active users +~40% QoQ; enterprise AccuTrade deal driving pipeline .

What Went Wrong

  • OEM and National revenue down 5% YoY; two OEMs temporarily reduced Q3 spend due to internal changes, not performance; late-quarter tapering and SAR revisions weighed on media .
  • GAAP net income declined YoY ($7.7M vs $18.7M), driven primarily by prior-year fair value changes to contingent consideration; diluted EPS fell to $0.12 (vs $0.28) .
  • Traffic and UVs modestly lower sequentially (seasonal and mix) despite record YTD traffic; ARPD still down YoY given mix shifts and lower media attach rates .

Financial Results

Quarterly Performance vs Prior Periods

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$179.0 $178.7 $181.6
GAAP Diluted EPS ($)-$0.03 $0.11 $0.12
Adjusted EPS ($)$0.37 $0.41 $0.48
Adjusted EBITDA ($USD Millions)$50.7 $50.9 $54.6
Adjusted EBITDA Margin (%)28.3% 28.5% 30.1%

Q3 2025 vs Prior Year (YoY)

MetricQ3 2024Q3 2025
Revenue ($USD Millions)$179.7 $181.6
GAAP Diluted EPS ($)$0.28 $0.12
Adjusted EPS ($)$0.41 $0.48
Adjusted EBITDA ($USD Millions)$51.1 $54.6
Adjusted EBITDA Margin (%)28.5% 30.1%

Segment Revenue ($USD Millions)

SegmentQ1 2025Q2 2025Q3 2025
Dealer$159.1 $158.5 $162.0
OEM and National$16.3 $16.6 $16.2
Other$3.6 $3.6 $3.4
Total$179.0 $178.7 $181.6

KPIs

KPIQ1 2025Q2 2025Q3 2025
Average Monthly Unique Visitors (Millions)29.0 26.6 25.5
Traffic (“Visits”, Millions)170.1 162.0 156.2
ARPD ($)$2,473 $2,435 $2,460
Dealer Customers19,250 19,412 19,526

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue GrowthH2 2025Low-single digit growth Low-single digit growth Maintained
Adjusted EBITDA MarginFY 202529%–31% (reaffirmed) 29%–31% (reaffirmed) Maintained
Share RepurchasesFY 2025Raised to $70–$90M Reaffirmed $70–$90M Maintained
Net Leverage TargetOngoingTarget 2.0x–2.5x At 1.9x (below low end) Position improved
Q2 Adj. EBITDA MarginQ2 202527%–29% guide Delivered 28.5% Achieved

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
AI/Technology InitiativesQ1: Product innovation priority; Q2: AI product progress Carson AI drives 2x listings views; users save 3x vehicles; mobile app rollout in pilot Accelerating
Marketplace RepackagingQ2: Launch of Premium/Premium+; ramp underway Preferred migration 100% complete by end-Oct; Premium+ +50% MoM Sept→Oct Adoption rising
OEM/National RevenueQ1: +6% YoY; Q2: +5% YoY with tariff-related shifts -5% YoY; two OEMs pulled back due to internal changes; late-quarter taper Volatile
Used-Car Sourcing (AccuTrade/DealerClub)Q1: AccuTrade appraisals +31% YoY; DealerClub active users +60% AccuTrade >1M appraisals; DealerClub active users +~40% QoQ Scaling
ARPD TrajectoryQ1: $2,473; Q2: $2,435 $2,460 (+1% QoQ); mix still weighs YoY; multiple levers ahead Stabilizing/Improving
Capital AllocationQ1: $21.5M buybacks; Q2: $23.1M; target raised Q3: $19.3M; YTD $63.9M; tracking high end Aggressive buybacks

Management Commentary

  • CEO: “We delivered record revenue… triple-digit growth in customer count… Carson… yielding a 2x improvement in visitor engagement” .
  • CEO on platform differentiation: “Only platform with integrated B2B wholesale and B2C retail… AI-first platform makes us essential” .
  • CFO: “Third quarter… produced our highest quarter of Adjusted EBITDA margin for this year… robust cash flow generation also enabled additional share repurchases” .
  • CFO on repackaging and ARPD: “Migration… 100% complete… ARPD up 1% quarter-over-quarter… optimistic trends will improve as these changes gain traction” .

Q&A Highlights

  • Dealer revenue drivers: Marketplace additions and repackaging lifted sequential ARPD; dealers lean into in-market demand over interruptive ads .
  • Premium+/media bundling: Premium+ includes VIN Performance Media (~$1,500/month retail), driving up-tier value capture .
  • AI engagement and attribution: Carson users save 3x more vehicles, view 2x more listings, return more frequently; AI references to Cars.com by LLMs amplify brand strength .
  • OEM variability and guidance: To hit high end of margin range, OEM/National would need heavier lift; some October pressure persisted, may flex late-year .
  • Capital allocation: Buybacks remain priority, tracking toward high end of $70–$90M .

Estimates Context

MetricQ3 2025 Consensus*Q3 2025 ActualBeat/Miss
Revenue ($USD Millions)$181.37*$181.57 Beat (+$0.20M; +0.1%)*
EPS (Normalized, $)$0.487*$0.48 Slight miss (-$0.007)*
# of Estimates (Revenue/EPS)7* / 4*——

Values retrieved from S&P Global.*

Implications: Small revenue beat and essentially in-line Adjusted EPS should anchor estimate models; ARPD trajectory and dealer count strengthen H1’26 run-rate, while OEM variability adds near-term uncertainty .

Key Takeaways for Investors

  • Dealer-led recovery is intact: sequential ARPD lift and record dealer count underpin a healthier subscription base for Q4 and FY26 set-up .
  • AI product edge is tangible: Carson drives deeper shopper engagement, likely supporting lead volumes and conversion as mobile app integration scales .
  • OEM volatility is the swing factor: two OEM pullbacks and SAR headwinds temper near-term media; high-end margin outcome requires OEM/National lift .
  • Margin discipline durable: FY25 Adjusted EBITDA margin reaffirmed at 29%–31% despite mix shifts; Q3 delivered 30.1% .
  • Balance sheet optionality: $350.1M liquidity and 1.9x net leverage provide flexibility to fund buybacks and product investment .
  • Capital returns are meaningful: YTD buybacks of $63.9M with target $70–$90M likely support EPS accretion, particularly with stable cash generation .
  • Traffic trends normalizing seasonally: record YTD traffic but sequential declines; Marketplace optimization and content syndication (Uber partnership) broaden funnel .

Additional Context

  • Uber Advertising partnership (JourneyTV Presents) enhances off-platform content reach with “Send to Phone” conversion path, reinforcing editorial authority and funnel expansion .

Appendix: Notes on Non-GAAP Adjustments

  • Net income YoY decline primarily reflects prior-year contingent consideration fair value changes; Adjusted metrics better reflect core operating performance (Adjusted EPS $0.48; Adjusted EBITDA $54.6M; Adjusted OpEx $150.4M) .