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01/10 00:29
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Revenue $179 million, down slightly year over year due to a softer start to the year for marketplace and pressure on media products.
Adjusted EBITDA $51 million, down slightly year over year, but exceeded expectations due to cost discipline and lower integration costs.
Net Loss $2 million or negative $0.03 per diluted share, compared to net income of $1 million or $0.01 per diluted share a year ago, primarily due to severance-related costs.
Adjusted Net Income $24 million or $0.37 per diluted share, down from $29 million or $0.43 per diluted share a year ago.
Free Cash Flow $24 million, down slightly year over year, reflecting adjusted EBITDA performance.
Share Repurchase $22 million in shares repurchased during the quarter, ahead of the capital return commitment for the year.
Operating Expenses $173 million, up 3% year over year, primarily from higher severance-related costs and new Dealer Club expenses.
Dealer Count 19,250 dealers, up more than 40 dealers quarter over quarter.
Total Liquidity $321 million as of 03/31/2025, providing ample future capacity to invest in growth.
Net Debt $460 million as of 03/31/2025, bringing total net leverage to 2.1 times.
ARPD (Average Revenue Per Dealer) $2,473, down $32 year over year, primarily reflecting changes in customer mix.
AccuTrade Appraisal Volume: AccuTrade appraisal volume was up over 813,000 appraisals in Q1, up a substantial 16% quarter over quarter.
Dealer Club Growth: Dealer Club increased active users by 60% and nearly doubled its volume of completed transactions from February to March.
New Website Customers: Added over 100 new website customers in Q1, with over 70% of those wins coming from Dealer Inspire.
Dealer Count: Dealer count rose to 19,250 dealers, the best quarter of sequential organic customer growth since mid-2022.
OEM Revenue Growth: OEM business grew 6% year over year, reflecting the value automakers place on our high-quality end market audience.
Unique Visitors: A record 29 million average monthly unique visitors utilized Cars.com to browse, research, and submit leads in Q1.
Adjusted EBITDA Margin: Adjusted EBITDA margin of 28.3% in Q1, exceeding expectations.
Free Cash Flow: Strong free cash flow enabled repurchase of $22 million of shares during the quarter.
Cost Control: Existing cost controls are performing well, with adjusted operating expenses roughly flat year over year.
Platform Strategy: The platform strategy combines a leading consumer marketplace with dealer software tools, key to diversified growth.
Product Innovation: Thoughtful product innovation leveraging AI and data intelligence positions Cars.com well to meet industry demand.
Suspension of Revenue Guidance: Suspending full-year revenue guidance until external visibility improves due to market uncertainty.
Earnings Expectations: Cars.com Inc. missed earnings expectations with a reported EPS of $-0.03, while expectations were $0.39.
Regulatory Issues: There are early signs from OEMs looking to manage their media commitments more closely due to uncertainty in the automotive outlook, which may affect advertising spending.
Supply Chain Challenges: The automotive industry is facing production forecasts being slashed due to recent policy changes, impacting the availability of new vehicles.
Economic Factors: The company is experiencing pressure on new car sales for OEMs and franchise dealers due to a revised down automotive industry outlook.
Revenue Guidance: The company has suspended full-year revenue guidance until external visibility improves, indicating uncertainty in market conditions.
Cost Management: Despite the challenges, the company is maintaining cost discipline and has additional operating levers to manage the business across various macroeconomic scenarios.
Dealer Revenue: Dealer revenue was down 2% year over year, attributed to a softer start to the year for marketplace and media products.
Market Volatility: The company is adjusting its approach to guidance due to changing market conditions, reflecting greater near-term macro and tariff-driven uncertainty.
Revenue Growth Initiatives: The company is focused on driving dealer count growth from additional solution sales, improving demand for the marketplace, and converting Dealer Club users into subscription-based products.
AccuTrade and Dealer Club Growth: AccuTrade appraisal volume was up over 813,000 appraisals in Q1, a 16% increase quarter over quarter. Dealer Club increased active users by 60% and nearly doubled its transaction volume from February to March.
Product Innovation: The company plans to incorporate additional data intelligence into Cars.com leads, enhancing dealer access to consumer shopping behavior insights.
Website Performance: Dealer Inspire and D2C Media added over 100 new customers in Q1, with improved website speed and performance contributing to growth.
Revenue Guidance: The company has suspended full-year revenue guidance due to macroeconomic uncertainties but expects Q2 revenue to be up year over year and quarter over quarter.
Adjusted EBITDA Margin Guidance: Adjusted EBITDA margin for Q2 2025 is expected to be between 27-29%, and for fiscal 2025, it is reaffirmed to be between 29-31%.
Capital Return Commitment: The company repurchased $22 million of shares in Q1, exceeding its target of $60 million to $70 million for 2025.
Free Cash Flow: Free cash flow was $24 million during Q1, down slightly year over year.
Share Repurchase Program: Repurchased approximately 1.6 million shares for $22 million in Q1 2025, exceeding the target of $60 million to $70 million for the year.
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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