Cars.com (CARS) Q4 2023 earnings summary

Executive summary

• FY2023 revenue rose 5% to $689.2M; Adjusted EBITDA was $194.9M, or 28.3% of revenue.

• Record FY2023 traffic reached 614.8M visits, up 5%; Q4 Adjusted EBITDA margin improved sequentially to 31%.

• 2023 platform expansion included the Cars Commerce brand launch, Marketplace Repackaging, and entry into Canada through the D2C Media acquisition.

Financial highlights

• Q4 revenue was $179.6M, up 7% YoY; excluding two months of D2C Media, revenue growth was 5%.

• Q4 Adjusted EBITDA was $55.4M, up 12% YoY, with a 31% margin; Q4 net income was $8.3M versus $10.3M a year earlier.

• FY2023 net income was $118.4M versus $17.2M in 2022, primarily reflecting a valuation allowance release; diluted EPS was $1.74 versus $0.25.

• FY Adjusted EBITDA was $194.9M versus $186.7M in 2022; margins were 28.3% and 28.6%, respectively.

• FY operating cash flow was $136.7M versus $128.5M; free cash flow was $115.8M versus $108.8M.

Outlook and guidance

• FY2024 revenue growth guidance is 6%–8%; Adjusted EBITDA margin guidance is 28%–30%, with margins expected to improve over the year.

• Q1 2024 revenue guidance is $179M–$181M, implying 7%–8% YoY growth; Adjusted EBITDA margin guidance is 27%–29%.

• Q1 outlook reflects D2C Media, product adoption, and the full-period impact of Marketplace Repackaging; FY2024 capex guidance is $23M–$25M and cash taxes are ~$20M.