Cars.com Inc. (CARS) is an audience-driven technology company empowering the automotive industry. The company has built an integrated platform that simplifies the entire car buying and selling process, from pre-retail activities to retail and post-sale operations. With its flagship marketplace Cars.com, award-winning digital retail solutions from Dealer Inspire, essential trade-in and appraisal technology from AccuTrade, and exclusive in-market media offerings from the Cars Commerce Media Network, the company is positioned as a one-stop-shop for dealers and OEMs to efficiently manage their operations and engage with in-market consumers.

Company History and Evolution

Cars.com Inc. has a rich history dating back to its establishment in 1998 as an online automotive marketplace and dealer reputation site. Originally formed as a joint venture between several media companies, including The Washington Post and The New York Times, Cars.com quickly emerged as a trusted destination for car shoppers. In its early years, the company focused on developing its online platform and content to attract a large audience of in-market car buyers, investing heavily in building out its marketplace and establishing itself as a go-to resource for automotive information.

As the industry evolved, Cars.com expanded its product offerings beyond its initial online marketplace. The company introduced digital solutions for dealers, including website hosting, trade-in appraisal technology, and media solutions. This expansion allowed Cars.com to provide a more comprehensive platform for both consumers and dealers, strengthening its position in the digital automotive space. A significant milestone in the company's history was the acquisition of Dealer Inspire in 2018, which enhanced Cars.com's digital retail capabilities and marked a strategic shift towards becoming a full-fledged technology partner for the automotive industry.

Throughout its journey, Cars.com has successfully navigated various challenges, including changes in consumer behavior, shifting industry dynamics, and competition from other online automotive platforms. The company's commitment to innovation and its ability to consistently deliver value to both consumers and dealers have been key factors in maintaining its leadership position in the market.

Financials

In 2024, Cars.com reported record full-year revenue of $719 million, a 4% increase year-over-year. This growth was driven by strength across the company's business segments, particularly in the OEM and National division, which saw an 18% increase in revenue for the full year. The company's Adjusted EBITDA margin also improved, reaching 30.8% in the fourth quarter, reflecting the company's focus on operational efficiency and cost discipline.

For the full year 2024, Cars.com achieved a net income of $48.19 million and generated an operating cash flow of $152.52 million. The company's free cash flow reached a multi-year high of $128.14 million, up $12 million year-over-year, demonstrating the scalability of its asset-light business model.

In the fourth quarter of 2024, Cars.com reported revenue of $180.43 million, representing a 0.5% year-over-year growth. This growth was primarily driven by a 15% increase in OEM and National revenue, partially offset by slight declines in Dealer revenue. The company's net income for the quarter stood at $17.30 million.

Cars.com's operations and revenue are substantially limited to the United States and Canada, with no significant international exposure reported.

Platform Strategy and Growth Drivers

Cars.com's platform strategy is centered around five key growth drivers: creating the most engaged in-market audience, growing its dealer customer base, unlocking cross-sell opportunities, transforming OEM relationships, and continually enhancing its technology offerings. The company's flagship marketplace, Cars.com, continues to dominate consumer mindshare, reaching over 23 million shoppers in the fourth quarter who collectively drove 143 million visits to the platform. This vast, high-intent audience is a crucial asset that the company leverages to drive value for its dealer and OEM customers.

To further strengthen its position, Cars.com has been focused on enhancing its product suite and driving increased adoption of its solutions. The company's AccuTrade trade-in and appraisal technology has seen considerable momentum, now utilized by over 1,000 dealerships. AccuTrade's growth has been fueled by OEM endorsements, with 8 new partnerships announced in the fourth quarter, as well as the platform's ability to streamline the vehicle acquisition process for dealers.

Strategic Acquisition and Market Expansion

In January 2025, Cars.com made a strategic addition to its platform with the acquisition of DealerClub, an emerging dealer-to-dealer digital wholesale auction marketplace. This acquisition expands the company's capabilities into the $10 billion wholesale market, providing dealers with a transparent, reputation-based solution to buy and sell vehicles. By integrating AccuTrade's industry-leading valuation tools and the Cars.com marketplace's vast inventory data, the company aims to create a seamless ecosystem that optimizes the entire vehicle lifecycle for its dealer customers.

Liquidity

On the financial front, Cars.com maintained a strong balance sheet, ending 2024 with $341 million in total liquidity and a net leverage ratio of 2.0x, at the low end of the company's target range. The company's cash and cash equivalents stood at $50.67 million, with an additional $290 million available under its Revolving Loan as of December 31, 2024. Cars.com's debt-to-equity ratio was 0.89, while both its current ratio and quick ratio were 1.83, indicating a solid liquidity position.

In February 2025, the board of directors authorized a new $250 million share repurchase program, underscoring the company's confidence in its long-term growth prospects and commitment to creating value for shareholders. For 2025, Cars.com plans to return $60-70 million to shareholders via share repurchases.

Future Outlook and Guidance

Looking ahead, Cars.com is guiding for full-year 2025 revenue of $745 million, with growth expected to be weighted towards the second half of the year as the company executes on key initiatives such as repackaging its dealer solutions, driving further AccuTrade and Dealer Club adoption, and expanding its OEM and national customer relationships. The company anticipates Adjusted EBITDA margin to range between 29-31% for the full year, reflecting its focus on operational excellence and the scalability of its platform.

For the first quarter of 2025, Cars.com expects revenue between $178-180 million, consistent with the prior year period. The company projects Q1 2025 adjusted EBITDA margin between 25.5-27%, down slightly year-over-year. Growth in the first half of 2025 is expected to be around 1.5-2% year-over-year, with initiatives more likely to be back-half weighted.

Product Segments and Revenue Drivers

Cars.com operates through four core product segments:

1. Marketplace: This segment, comprising the Cars.com platform, is the company's primary revenue driver, accounting for 89% of total revenue in 2024. It allows dealers and OEMs to showcase their inventory to a large audience of in-market car shoppers. Dealers using upper-tier marketplace packages experienced double-digit improvements in inventory turn time.

2. Digital Experience: This segment includes website creation, hosting, and digital retailing solutions offered under the Dealer Inspire and D2C Media brands. Dealers using these solutions in conjunction with the Marketplace see approximately 40% more connections to their website and 90% more leads compared to those without the Marketplace.

3. Trade Appraisal: Powered by AccuTrade, this segment provides real-time, VIN-specific vehicle valuation and appraisal data. AccuTrade has been shown to save dealers an average of $700 per vehicle in reconditioning costs.

4. Cars Commerce Media Network: This segment unifies the company's suite of exclusive in-market media solutions, enabling targeted, performance-driven advertising for dealers and OEMs.

In 2024, dealer revenue, the company's largest segment, grew 3% to $640.72 million, driven by growth in Digital Experience solutions and the incremental contribution from the D2C Media acquisition. OEM and National revenue increased 18% to $65.89 million as OEMs increased spending to raise consumer awareness amid improving vehicle inventory levels.

Key Metrics

Cars.com reported the following key metrics:

• Average monthly unique visitors: 25.52 million
• Monthly average revenue per dealer (ARPD): $2,475
• Dealer customers: 19,206

Conclusion

Despite a challenging macroeconomic environment, Cars.com has demonstrated its resilience, navigating industry dynamics and delivering consistent financial performance. The company's diversified business model, innovative product suite, and strategic acquisitions position it well to capture market share and drive sustainable growth in the years to come. With approximately 80% of its revenue generated from subscription-based products, Cars.com has established a dependable recurring revenue stream. As the automotive industry continues to evolve, Cars.com is poised to be an essential partner for dealers and OEMs seeking to simplify their operations and enhance the customer experience.