Cars.com (CARS) Q4 2017 earnings summary

Executive summary

• 2017 marked the spin-off and start of NYSE trading; strategy centered on direct sales conversion, dealer solutions and faster product development.

• Revenue was $626.3m and net income $224.4m; mobile traffic grew 6% while total traffic declined 3%.

• February 2018 acquisitions of Dealer Inspire and Launch Digital Marketing expanded dealer website, digital retailing, messaging and marketing capabilities.

Financial highlights

• FY17 revenue was $626.3m, down 1% YoY; operating income was $134.3m, down 24%, and net income was $224.4m, up 27%.

• Diluted EPS was $3.13 vs. $2.46; FY17 net income included non-cash tax benefits of $51m from the outside-basis write-off and $80m from federal tax-rate reduction.

• Operating cash flow was $185.9m vs. $199.2m; cash and equivalents ended the year at $20.6m.

• G&A rose 88% to $44.9m, including $8.0m of public-company costs, $2.6m of stock compensation and $12.9m of separation and headquarters-relocation costs.

Outlook and guidance

• Early 2018 showed improvement in overall traffic, with SEO progress attributed to coordinated product launches, content optimization and site improvements.

• Priorities include consumer product innovation and traffic growth, affiliate integration and acquisition integration to improve operating efficiencies and dealer connections.

• Affiliate-market conversions representing nearly 60% of wholesale revenue were announced across 2017 and early 2018; converted markets are expected to improve revenue and profitability.