Cars.com, Inc. ((CARS)) has held its Q4 earnings call. Read on for the main highlights of the call.
Cars.com Inc. Reports Record Revenue Amid Strategic Expansions
The recent earnings call for Cars.com Inc. was marked by a positive sentiment, highlighting the company’s strong financial performance in 2024. With record revenue and strategic expansions through new products and acquisitions, the company addressed challenges such as dealer revenue decline and initial margin pressure. Confidence was expressed in overcoming these challenges through strategic initiatives and new leadership.
Record Full-Year Revenue
Cars.com Inc. achieved a record full-year revenue of $719 million, representing a 4% increase year over year. This marks the seventeenth consecutive quarter of year-over-year revenue growth, showcasing the company’s consistent financial performance.
OEM and National Revenue Growth
The company saw a significant increase in OEM and national revenue, which grew by 15% year over year in Q4, contributing to an 18% growth for the full year. This growth was supported by increased spending from half of the OEM partners.
AccuTrade Expansion
AccuTrade expanded its reach to over 1,000 dealerships, with a 35% increase in annual appraisal volume and a 23% increase in vehicles acquired post-appraisal per dealer year over year in Q4.
New Product Innovations and Acquisitions
Cars.com introduced the DealerQuote acquisition and launched Dealer Club, a dealer-to-dealer wholesale marketplace. This move allows the company to tap into a $10 billion wholesale market, further strengthening its market position.
Strong Free Cash Flow
The company reported a free cash flow of $128 million, the highest level since 2018, which reflects strong operating discipline and financial health.
Appointment of New Chief Commercial Officer
Lisa Goss was appointed as the new Chief Commercial Officer, tasked with driving revenue growth and go-to-market strategies, indicating a strategic focus on leadership to propel future growth.
Share Repurchase Program
A new $250 million share repurchase authorization was announced, refreshing and increasing the prior $200 million authorization, signaling confidence in the company’s financial stability and future prospects.
Dealer Revenue Decline
Despite robust dealer revenue, there was a slight decline year over year in the fourth quarter due to seasonal softness, elevated churn, and fewer upgrades.
ARPD Decline
The average revenue per dealer (ARPD) in Q4 was down $48 year over year, affected by a lower customer count and less upgrade activity.
Initial Margin Pressure
The first-quarter 2025 adjusted EBITDA margin is expected to be slightly down year over year due to lower dealer revenue exit rates and investments in Dealer Club.
Seasonal Softness Impact
Marketplace performance was impacted by expected seasonal softness, leading to slightly elevated churn and fewer upgrades in Q4.
Forward-Looking Guidance
Looking ahead to 2025, Cars.com Inc. anticipates revenue growth of $745 million, driven by product innovation, new launches, and strategic acquisitions like Dealer Club. The company expects sustained growth acceleration in the second half of the year, despite some seasonal challenges.
In summary, Cars.com Inc.’s earnings call reflected a strong financial performance with record revenue and strategic expansions. While challenges such as dealer revenue decline and initial margin pressure were acknowledged, the company remains confident in its ability to overcome these through strategic initiatives and leadership changes. The forward-looking guidance suggests continued growth and innovation, positioning Cars.com for a promising future.