Cars.com (CARS) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached $180 million, up 3% year-over-year, marking a record quarter with robust OEM/National growth and strong platform adoption, including AccuTrade and VIN Performance Media.

• Net income rose to $18.7 million ($0.28 per diluted share), up from $4.5 million ($0.07 per share) a year ago, mainly due to changes in fair value of contingent consideration.

• Adjusted EBITDA was $51.1 million, up 3% year-over-year, with a margin of 28.5%, at the high end of guidance.

• Dealer count rebounded in October after a Q3 dip due to a third-party DMS outage.

• Share repurchases totaled 1.2 million shares for $21 million in Q3; year-to-date repurchases reached 2.0 million shares for $35.7 million.

Financial highlights

• Q3 revenue totaled $180 million, up 3% year-over-year, with OEM and National revenue up 17% to $17 million, the highest in over three years.

• Dealer revenue grew 2% year-over-year to $160 million, supported by product adoption and stable ARPD.

• Adjusted net income was $27.7 million ($0.41 per share), nearly flat year-over-year.

• Free cash flow year-to-date was $104 million, up $28 million year-over-year, with a ~13% FCF yield.

• Net leverage ratio improved to 2.0x by Q3 2024, at the low end of the target range.

Outlook and guidance

• Fiscal year 2024 revenue growth outlook reaffirmed at 4.5%–5.5%.

• Q4 expected to see high single-digit year-over-year growth in OEM and National revenue; dealer revenue to grow modestly.

• Adjusted EBITDA margin for 2024 expected at 28%–30%, with Q4 margin anticipated at approximately 30%.

• Management expects continued investment in digital solutions and technology to support long-term growth.

• Liquidity is expected to remain strong, with positive operating cash flow and significant borrowing capacity.