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Cars.com Inc. (CARS)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $180.4M, up slightly year-over-year; Adjusted EBITDA was $55.5M with a 30.8% margin, the strongest quarter of 2024 on both dollars and margin .
  • OEM and National revenue rose 15% YoY, while subscription Dealer revenue fell 1% YoY due to pressure on dealer profitability and marketing spend; adjusted operating expenses were flat YoY, reflecting cost discipline .
  • Management introduced 2025 guidance: Q1 revenue of $178–$181M and Adjusted EBITDA margin of 25.5%–27%; FY 2025 revenue of $745–$755M and Adjusted EBITDA margin of 29%–31% .
  • Capital return and platform expansion were key catalysts: a new $250M share repurchase authorization targeting $60–$70M in 2025, and the January acquisition of DealerClub to add a transactional wholesale revenue stream; near-term margin headwinds reflect integration investments .

What Went Well and What Went Wrong

What Went Well

  • OEM and National revenue grew 15% YoY, reflecting strong automaker marketing as inventory levels normalized; the business posted its highest quarterly OEM/National revenue since 2021 and meaningfully higher 2025 upfronts .
  • Adjusted EBITDA margin reached 30.8% in Q4, with sustained marketing efficiency and cost discipline; free cash flow for FY 2024 was $128.1M, the highest since 2018 .
  • AccuTrade reached ~1,000 subscribers with eight to ten OEM endorsements by January; management emphasized cross-selling across Marketplace, AccuTrade, and DealerClub to lift ARPD and transaction revenue: “customers… appraise, source, retail, and wholesale vehicles all within the Cars Commerce platform” .

What Went Wrong

  • Dealer revenue declined 1% YoY, with marketplace softness from seasonal churn and fewer upgrades; ARPD fell 2% YoY to $2,475 .
  • Q1 2025 margin guide (25.5%–27%) implies a sharper-than-usual seasonal dip due to DealerClub integration costs and Q4 dealer revenue exit rate; margins expected to ramp in 2H with back-half-weighted growth initiatives .
  • Average Monthly Unique Visitors fell 5% YoY amid seasonal trends, though repeat visitation rose 6% YoY; traffic was down 7% sequentially to 143.8M visits .

Financial Results

Headline Metrics (Quarterly)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$178.9 $179.7 $180.4
Diluted EPS ($USD)$0.17 $0.28 $0.26
Adjusted EPS ($USD)$0.38 $0.41 $0.49
Adjusted EBITDA ($USD Millions)$50.4 $51.1 $55.5
Adjusted EBITDA Margin (%)28.0% 28.5% 30.8%
Consensus Revenue (S&P Global)UnavailableUnavailableUnavailable
Consensus EPS (S&P Global)UnavailableUnavailableUnavailable

Note: S&P Global consensus estimates were unavailable at time of retrieval.

Segment Revenue (Quarterly)

Segment ($USD Millions)Q2 2024Q3 2024Q4 2024
Dealer$159.8 $159.5 $159.6
OEM and National$15.8 $17.0 $17.7
Other$3.2 $3.1 $3.1
Total Revenue$178.9 $179.7 $180.4

KPIs (Quarterly)

KPIQ2 2024Q3 2024Q4 2024
Avg Monthly Unique Visitors (Millions)26.1 24.5 23.1
Traffic (“Visits”, Millions)158.1 154.2 143.8
ARPD ($USD)$2,474 $2,478 $2,475
Dealer Customers (#)19,390 19,255 19,206

Income Statement and Cash Flow Highlights (FY 2024)

MetricFY 2024
Revenue ($USD Millions)$719.2
Net Income ($USD Millions)$48.2
Adjusted Net Income ($USD Millions)$114.9
Adjusted EBITDA ($USD Millions)$209.7
Adjusted EBITDA Margin (%)29.2%
Free Cash Flow ($USD Millions)$128.1

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q1 2025N/A$178–$181 Introduced
Adjusted EBITDA Margin (%)Q1 2025N/A25.5%–27% Introduced
Revenue ($USD Millions)FY 2025N/A$745–$755 Introduced
Adjusted EBITDA Margin (%)FY 2025N/A29%–31% Introduced
Share Repurchases ($USD Millions)FY 2025N/ATarget $60–$70 Introduced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
AccuTrade adoptionCertified by multiple OEMs (Q2); 950 subscribers (Q3) ~1,000 subscribers; 8 new OEM endorsements; appraisals up 35% YoY; vehicles acquired per dealer +23% YoY Accelerating adoption; usage and endorsements rising
OEM & National revenue+28% YoY (Q2 record); +17% YoY (Q3) +15% YoY; 2025 upfronts up double digits; best quarterly since 2021 Sustained growth; decelerating rate but strong outlook
Dealer revenue/ARPDDealer +4% YoY; ARPD $2,474 (Q2) Dealer +2% YoY; ARPD $2,478 (Q3) Dealer -1% YoY; ARPD $2,475; marketplace seasonal churn
AI/technology initiativesPlatform includes AI-driven technologies (Q2/Q3) AI pilots improved appointments ~20%; IIP predictive analytics (time-on-lot, daily depreciation) Expanding application across operations and inventory optimization
DealerClub wholesaleN/A (pre-acquisition)Acquisition closed Jan 23; integration with AccuTrade targeted for 1H 2025; early dealer registrations (~900 at NADA) Early scaling; margin investment in H1; transactional revenue optionality
Macro/tariffsCDK cyber incident disruption cited (Q2); macro pressure on dealer profitability (Q3) Assumes relatively stable macro; tariffs not expected to impact applicability Monitoring; stable assumptions underpin outlook
Websites (DI/D2C)DI/D2C adoption; Canada provider growth (Q2/Q3) Repackaging, higher-tier migrations; OEM-endorsed security/data position Continued expansion; pricing power via value-added integrations

Management Commentary

  • “OEM and National meaningfully outperformed, up 15% year-over-year to its best quarterly revenue since 2021… our strong cost discipline enabled us to exceed adjusted EBITDA margin expectations” (Alex Vetter) .
  • “AccuTrade had a strong fourth quarter… appraise, source, retail, and wholesale vehicles all within the Cars Commerce platform” (Alex Vetter) .
  • “Adjusted EBITDA margin… 30.8%… free cash generation reached the highest level since 2018… targeting share repurchases totaling $60 to $70 million for 2025” (Sonia Jain) .
  • “We anticipate revenue of $745 million to $755 million… several initiatives… more likely to be back half weighted” (Sonia Jain) .
  • “DealerClub… launches us into a $10 billion wholesale market… transparent auctions with seller ratings… <1% meaningful arbitration since inception” (Alex Vetter) .

Q&A Highlights

  • Margin cadence: Q1 EBITDA margin down more than typical seasonality due to DealerClub integration costs and Q4 dealer exit rate; margins expected to ramp through the year as initiatives kick in (Sonia Jain) .
  • DealerClub integration timeline and scaling: Platform functional today; AccuTrade one‑click wholesale integration targeted for 1H 2025; ~900 dealer registrations following NADA (Alex Vetter) .
  • AccuTrade growth drivers: OEM endorsements driving launches; expanding within dealer groups; pricing power over time as usage increases (Alex Vetter) .
  • Repackaging and ARPD: Plan to elevate marketplace packages and migrate websites to higher tiers; ~75% marketplace customers in premium/preferred, providing headroom (Sonia Jain) .
  • Buybacks: Target $60–$70M in 2025; company will be opportunistic given valuation and free cash flow (Sonia Jain) .

Estimates Context

  • S&P Global Wall Street consensus estimates for Q4 2024 revenue and EPS were unavailable at time of retrieval; as a result, explicit beat/miss vs consensus cannot be determined. Management did note 17 consecutive quarters of YoY revenue growth and stronger OEM/National demand heading into 2025 .

Key Takeaways for Investors

  • Strong OEM/National momentum (+15% YoY) and double‑digit 2025 upfronts should help offset near‑term dealer revenue pressure and support top‑line resilience .
  • Q4 delivered the highest Adjusted EBITDA margin of 2024 (30.8%); expect a seasonal/integration‑driven margin dip in Q1 to 25.5%–27% before improving in 2H as repackaging and cross‑sell initiatives scale .
  • AccuTrade adoption and OEM endorsements (~1,000 subs; 8 new endorsements) plus IIP analytics are positioned to lift ARPD and retention; cross‑sell with DealerClub introduces a new transactional revenue stream over time .
  • DealerClub adds strategic optionality in a ~$10B wholesale market; minimal revenue contribution expected in 2025, but integration investments weigh temporarily on margins, with synergy potential as AccuTrade/IIP connect .
  • Capital allocation remains shareholder‑friendly: $250M repurchase authorization and $60–$70M targeted for 2025, with net leverage at ~2.0x and liquidity of ~$341M at FY‑end .
  • Marketplace KPIs show seasonal softness (UVs down 5% YoY, traffic down 7% QoQ), but repeat visitation up 6% YoY and organic traffic at 61%, underpinning brand and demand quality .
  • Narrative for 2025 is back‑half weighted growth via packaging, website tier migrations, AccuTrade endorsements, and DealerClub integration—watch for execution milestones in H1 and margin expansion in H2 .