Cars.com Inc (CARS) Q2 2024 Earnings Call Highlights: Revenue Growth and Strategic OEM ...

GuruFocus News
4 min read

In This Article:

  • Revenue: $179 million, up 6% year-over-year.

  • OEM and National Revenue: $16 million, up 28% year-over-year.

  • Dealer Revenue: $160 million, up 4% year-over-year.

  • Adjusted EBITDA: $50 million, up 10% year-over-year.

  • Adjusted EBITDA Margin: 28.2%.

  • Net Income: $11 million or $0.17 per diluted share.

  • Adjusted Net Income: $26 million or $0.38 per diluted share.

  • Free Cash Flow: $56 million for the first six months of 2024.

  • Total Customers: 19,390.

  • ARPD (Average Revenue Per Dealer): $2,474, up slightly year-over-year.

  • Total Debt Outstanding: $475 million as of June 30, 2024.

  • Total Liquidity: $304 million as of June 30, 2024.

  • Net Leverage: 2.1 times.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Cars.com Inc (NYSE:CARS) reported a 6% year-over-year increase in Q2 revenue, marking the 15th consecutive quarter of revenue growth.

  • OEM and national performance was particularly strong, with a 28% year-over-year increase, driven by increased demand from both new and existing partners.

  • The company achieved record free cash flow of $56 million for the first half of 2024, the highest level in three years.

  • Cars.com Inc (NYSE:CARS) expanded its dealer customer base and maintained average revenue per dealer (ARPD), despite industry disruptions.

  • The company secured new OEM endorsements, including certifications from Stellantis and Jaguar Land Rover, which are expected to drive future growth.

Negative Points

  • The CDK disruption in June significantly impacted sales momentum and delayed product launches, affecting revenue growth.

  • AccuTrade subscriber growth did not meet expectations, with challenges in dealer adoption and operational process changes.

  • The company revised its full-year revenue growth guidance to 4.5% to 5.5%, down from previous expectations.

  • There was a 1% unexpected impact from discrete items related to legacy solutions contracts, affecting Q2 revenue.

  • Despite efforts, AccuTrade did not see growth in dealer customers during Q2, and the sales pipeline was affected by the CDK incident.

Q & A Highlights

Q: Can you explain the 1% unexpected impact from a legacy solutions contract and the dynamics leading to higher churn in AccuTrade? A: The impact was related to legacy contracts in our website business, which are one-time in nature. For AccuTrade, while we made positive changes, dealer adoption was challenging due to operational process changes and turnover at dealerships. We are shifting to an OEM endorsement model to expand accounts, which may result in slower revenue growth but should increase dealer growth over time. - Sonia Jain, CFO and T. Alex Vetter, CEO

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