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01/10 00:28
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a generally positive outlook with a record revenue, strong OEM growth, and high EBITDA margins. Share repurchases indicate confidence in stock value. Despite some challenges like dealer count decline and CDK outage, management's optimistic guidance and strategic growth initiatives, especially in OEM and AccuTrade, suggest potential for stock appreciation. The market cap indicates a small-cap stock, which may react strongly to positive news. Overall, the sentiment leans positive, with potential for a 2% to 8% stock price increase.
Revenue $180 million, up 3% year-over-year. This growth was driven by contributions from D2C media and improved adoption of website and trade appraisal products.
Dealer Revenue $160 million, up 2% year-over-year, driven by contributions from D2C media and improved adoption of website and trade appraisal products.
OEM Revenue $17 million, up 17% year-over-year, reflecting broad demand across the marketplace and ongoing OEM investments into marketing and advertising.
Adjusted EBITDA $51 million, up 3% year-over-year, with an adjusted EBITDA margin of 28.5%, at the high end of guidance.
Net Income $19 million or $0.28 per diluted share, compared to $4 million or $0.07 per diluted share a year ago, primarily due to the change in the fair value contingent consideration of prior acquisitions.
Adjusted Net Income $28 million or $0.41 per diluted share, compared to $27 million or $0.40 per diluted share a year ago.
Free Cash Flow $104 million year-to-date, up approximately $28 million year-over-year, driven by adjusted EBITDA growth and timing related to lower cash taxes and working capital.
Operating Expenses $168 million, up roughly 5% year-over-year, with adjusted operating expenses at $156 million, approximately 4% higher than the same period last year.
Total Debt Outstanding $470 million as of September 30, 2024, down $5 million from the previous quarter.
Total Liquidity $330 million as of September 30, 2024, ensuring ample resources for growth strategy.
ARPD (Average Revenue Per Dealer) $2,478, down $70 year-over-year, largely due to D2C growth which contributes lower average revenue per dealer.
Dealer Customer Count 19,255, down 135 dealers quarter-over-quarter, reflecting challenges faced in July and August.
Net Leverage 2x, at the low end of the target range of 2 to 2.5x.
AccuTrade Performance: AccuTrade returned to positive quarter-over-quarter subscriber growth, with appraisal volume rising to 671,000, up 5% quarter-over-quarter.
Digital Website Experience: Over 7,650 dealer websites powered, up nearly 150 customers sequentially, with significant expansion in Canada.
VIN Performance Media: VIN Performance Media product quadrupled its subscriber base since Q1 launch, exceeding $3 million in annualized revenue in Q3.
OEM Revenue Growth: OEM revenue grew 17% year-over-year to exceed $17 million, marking a new 3-year high.
Dealer Customer Count: Ended Q3 with 19,255 dealer customers, down 135 quarter-over-quarter, but positive growth in October.
Adjusted EBITDA Margin: Adjusted EBITDA margin of 28.5%, at the top of guidance range.
Free Cash Flow: Free cash flow was $104 million year-to-date, $28 million higher year-over-year.
Partnerships with OEMs: Active talks to win more partnerships in 2025, leveraging OEM endorsement to stimulate dealer sales.
Product Development Focus: Prioritizing product development to ensure quality and scale for marketplace participants.
Dealer Funding Trends: Dealer funding trends have been pressured in the near term by profit normalization, which may impact dealer spending and growth.
DMS Outage Impact: A third-party DMS outage in Q3 temporarily muted dealer growth, indicating vulnerability in operational dependencies.
Dealer Customer Count: The dealer customer count decreased by 135 quarter-over-quarter, reflecting challenges in sales momentum during July and August.
Economic Environment: The company is operating in a dynamic environment, monitoring trends that impact dealer and OEM spending, which could affect future growth.
Regulatory and Compliance Risks: The company referenced risks and uncertainties related to forward-looking statements, including regulatory issues that could impact business operations.
Supply Chain Challenges: The company acknowledged the need for a balance of new and used inventory on the marketplace, indicating potential supply chain challenges.
OEM Revenue Growth: OEM revenue grew 17% year-over-year to exceed $17 million, a new 3-year high based on broad demand from partners.
AccuTrade Growth: AccuTrade returned to positive quarter-over-quarter subscriber growth, with appraisal volume rising to 671,000, up 5% quarter-over-quarter.
Dealer Website Expansion: Powered over 7,650 dealer websites during Q3, up nearly 150 customers sequentially, with significant expansion in Canada.
VIN Performance Media Growth: VIN Performance Media product almost quadrupled its subscriber base since its Q1 launch, exceeding $3 million in annualized revenue in Q3.
Product Development Focus: Continuing to prioritize product development to ensure quality and scale, with plans to leverage content, data, and insights for consumer differentiation.
Revenue Growth Guidance: Reaffirming fiscal year 2024 outlook of 4.5% to 5.5% revenue growth based on year-to-date performance and current business trends.
OEM and National Revenue Growth: Anticipate strong high single-digit year-over-year growth in OEM and National revenue for Q4.
Dealer Revenue Growth: Dealer revenue expected to grow modestly year-over-year, with continued product adoption.
Adjusted EBITDA Margin Guidance: Adjusted EBITDA margin outlook for fiscal 2024 remains at 28% to 30%, with expected adjusted EBITDA growth of approximately 8% year-over-year.
Q4 Adjusted EBITDA Margin: Expect to exit Q4 with adjusted EBITDA margin of approximately 30% based on continued cost discipline and operational efficiency.
Share Repurchase: During the third quarter, Cars.com repurchased 1.2 million shares for $21 million and is on pace to return approximately 50% of second half free cash flow to shareholders via share repurchases. Year-to-date, the company has repurchased 2 million shares for $36 million, with $84 million remaining on the current share repurchase authorization.
The earnings call reveals several negative factors: missed EPS expectations, suspended revenue guidance, and regulatory/supply chain challenges. The Q&A section highlights uncertainty in ad spending and management's unclear responses. Despite positive aspects like share repurchases and cost discipline, the overall sentiment is negative, especially with the market cap indicating a small-cap stock, which tends to react strongly to negative news.
The earnings call presents a generally positive outlook with a record revenue, strong OEM growth, and high EBITDA margins. Share repurchases indicate confidence in stock value. Despite some challenges like dealer count decline and CDK outage, management's optimistic guidance and strategic growth initiatives, especially in OEM and AccuTrade, suggest potential for stock appreciation. The market cap indicates a small-cap stock, which may react strongly to positive news. Overall, the sentiment leans positive, with potential for a 2% to 8% stock price increase.
The earnings call presented mixed signals: a 6% revenue growth and a strong OEM performance were offset by increased competition and economic risks. The Q&A highlighted concerns about legacy contracts and disruptions impacting revenue guidance. Despite positive share repurchase plans and liquidity, uncertainties around dealer adoption and the CDK disruption weigh on sentiment. Given the market cap of $1.3 billion, a neutral stock price movement is likely, with potential fluctuations within a -2% to 2% range over the next two weeks.
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