Cars.com Reports First Quarter 2024 Results
Cars.com Inc., a leading technology company in the automotive industry, reported strong financial results for Q1 2024. They achieved significant revenue growth, increased ARPD, and generated cash flows. The company also amended its credit agreement, showing financial stability and growth potential.
Strong revenue growth of $180.2 million, up 8% year-over-year
ARPD grew by 5% year-over-year to $2,505
Generated $33MM in cash flows from operating activities in the first quarter
Amended credit agreement to a $350MM All-Revolver structure, extending maturity to 2029
Net income decreased to $0.8 million from $11.5 million year-over-year
Operating expenses increased to $167.4 million from $154.5 million in the prior year
Adjusted net income rose to $28.7 million from $26.2 million year-over-year
Delivered Strong Revenue Growth Including
Achieved
Generated
Amended and Extended Credit Agreement into a
Q1 2024 Financial Highlights
- Revenue of
$180.2 million $13.1 million 8% year-over-year - Net income of
$0.8 million $0.01 $11.5 million $0.17 - Adjusted net income of
$28.7 million $0.43 $26.2 million $0.39 - Adjusted EBITDA of
$52.7 million 29% of revenue, up$8.3 million - Amended existing Credit Facility, extending maturity to 2029
Q1 2024 Key Metrics and Operational Highlights
- Average Monthly Unique Visitors ("UVs") of 28.3 million, compared to 28.5 million a year ago
- Traffic ("Visits") of 171.4 million, up
4% year-over-year - Monthly Average Revenue Per Dealer ("ARPD") of
$2,505 5% year-over-year - Dealer Customers totaled 19,381 as of March 31, 2024, compared to 19,504 as of December 31, 2023
"We delivered another strong quarter driven by our progress against the growth drivers underpinning our platform strategy. We believe Dealers and OEMs will increasingly need our industry-leading solutions to connect with in-market shoppers and drive greater efficiency while managing rising inventory levels. As our product adoption continues to grow, we are well-positioned to deliver our full-year guidance," said Alex Vetter, Chief Executive Officer of Cars Commerce.
Q1 2024 Results
Revenue for the first quarter totaled
First quarter ARPD grew
Total operating expenses for the first quarter were
Net income for the quarter was
Adjusted EBITDA for the quarter totaled
Consumer interest in vehicle purchases remains strong; total Traffic reached 171.4 million and Average Monthly Unique Visitors for the quarter year were 28.3 million.
Cash Flow and Balance Sheet
Net cash provided by operating activities in the first quarter 2024 was
The Company repaid
In May 2024, the Company amended and extended its existing Credit Facility in a leverage neutral transaction, combining its current Term loan and Revolving loan into a new
The Company continued to execute on its balanced capital allocation strategy and for the quarter, repurchased 0.5 million shares of its common stock for
"The strength of our subscription-based platform and our asset light business generated another quarter of robust revenue growth and Adjusted EBITDA," said Sonia Jain, Chief Financial Officer of Cars Commerce. "Additionally, we refinanced our existing credit facility on favorable terms, which further strengthens our financial profile and flexibility. Our consistent execution supports strong cash flow generation and enables us to continue to invest in growth drivers that create shareholder value."
2024 Outlook
The Company believes consistent execution of its platform strategy will drive continued revenue growth and margin expansion. Second quarter revenue is expected to be between
For the year, the Company reaffirms its full year revenue growth guidance of
Q1 2024 Earnings Call
As previously announced, management will hold a conference call and webcast today at 8:00 a.m. CT. This webcast may be accessed at the Cars Commerce Investor Relations website, investor.cars.com. An archive of the webcast will be available at investor.cars.com following the conclusion of the call.
About Cars Commerce
Cars Commerce is an audience-driven technology company empowering the automotive industry. The Company simplifies everything about car buying and selling with powerful products, solutions and AI-driven technologies that span pretail, retail and post-sale activities – enabling more efficient and profitable retail operations. The Cars Commerce platform is organized around four industry-leading brands: the flagship automotive marketplace and dealer reputation site Cars.com, award-winning technology and digital retail technology and marketing services from Dealer Inspire, essential trade-in and appraisal technology from AccuTrade, and exclusive in-market media solutions from the Cars Commerce Media Network. Learn more at www.carscommerce.inc.
Non-GAAP Financial Measures
This earnings release discusses Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income, Free Cash Flow and Adjusted Operating Expenses. These financial measures are not prepared in accordance with generally accepted accounting principles in
While a reconciliation of non-GAAP measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to, as applicable, the timing, amount, valuation and number of future employee equity awards and the uncertainty relating to the timing, frequency, and effect of acquisitions and the significance of the resulting transaction-related expenses, the Company has provided a reconciliation of non-GAAP financial measures to their most directly comparable financial measure prepared in accordance with GAAP in this earnings release, see "Non-GAAP Reconciliations" below.
Other companies may define or calculate these measures differently, limiting their usefulness as comparative measures. Because of these limitations, non-GAAP financial measures should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP. Definitions of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP financial measures are presented in the tables below.
The Company defines Adjusted EBITDA as net income (loss) before (1) interest expense, net, (2) income tax (benefit) expense, (3) depreciation, (4) amortization of intangible assets, (5) stock-based compensation expense, (6) unrealized mark-to-market adjustments and cash transactions related to derivative instruments, (7) unrealized foreign currency exchange gains and losses, and (8) certain other items, such as transaction-related items, severance, transformation and other exit costs and write-off and impairments of goodwill, intangible assets and other long-lived assets.
Transaction-related items result from actual or potential transactions such as business combinations, mergers, acquisitions, dispositions, spin-offs, financing transactions, and other strategic transactions, including, without limitation, (1) transaction-related bonuses and (2) expenses for advisors and representatives such as investment bankers, consultants, attorneys and accounting firms. Transaction-related items may also include, without limitation, transition and integration costs such as retention bonuses and acquisition-related milestone payments to acquired employees, consulting, compensation and other incremental costs associated with integration projects, fair value changes to contingent considerations and amortization of deferred revenue related to the AccuTrade acquisition.
The Company defines Adjusted Net Income as GAAP net income (loss) excluding, net of their related tax effects: (1) amortization of intangible assets, (2) stock-based compensation expense, (3) unrealized mark-to-market adjustments and cash transactions related to derivative instruments, (4) unrealized foreign currency exchange gains and losses, and (5) certain other items, such as transaction-related costs, severance, transformation and other exit costs and write-off and impairments of goodwill, intangible assets and other long-lived assets.
The Company defines Free Cash Flow as net cash provided by operating activities less capital expenditures, including purchases of property and equipment and capitalization of internally developed technology.
The Company defines Adjusted Operating Expenses as total operating expenses adjusted to exclude stock-based compensation, write-off and impairments of goodwill, intangible assets, long-lived assets, severance, transformation and other exit costs and transaction-related items.
Key Metric Definitions
Average Monthly Unique Visitors ("UVs") and Traffic ("Visits"). The Company defines UVs in a given month as the number of distinct visitors that engage with its platform during that month. Visitors are identified when a user first visits an individual Cars.com property on an individual device/browser combination or installs one of its mobile apps on an individual device. If a visitor accesses more than one of its web properties or apps or uses more than one device or browser, each of those unique property/browser/app/device combinations counts toward the number of UVs. Traffic is defined as the number of visits to Cars.com desktop and mobile properties (responsive sites and mobile apps). The Company measured UVs and Traffic via Adobe Analytics through the year ended December 31, 2023. As of January 1, 2024, the Company now measures UVs and Traffic via RudderStack, which better aligns to the Company's product and technology platform and provides improved visibility into its UVs and Traffic. Prior period UVs and Traffic information has not been recast, as it is impractical to do so. These metrics do not include traffic to Dealer Inspire or D2C Media websites.
Monthly Average Revenue Per Dealer ("ARPD"). The Company believes that its ability to grow ARPD is an indicator of the value proposition of its platform. The Company defines ARPD as Dealer revenue, excluding digital advertising services, during the period divided by the monthly average number of Dealer Customers during the same period. Beginning with the three months ended June 30, 2022, AccuTrade is included in our ARPD metric. No prior period has been recast as it would be impracticable to do so and the inclusion of AccuTrade would have had an immaterial impact on ARPD for prior periods. Additionally, beginning December 31, 2023, this key operating metric includes D2C Media.
Dealer Customers. Dealer Customers represent dealerships using our products as of the end of each reporting period. Each physical or virtual dealership location is counted separately, whether it is a single-location proprietorship or part of a large, consolidated dealer group. Multi-franchise dealerships at a single location are counted as one dealer. Beginning June 30, 2022, this key operating metric includes AccuTrade; however, no prior period has been recast as it would be impracticable to do so. Additionally, beginning December 31, 2023, this key operating metric includes D2C Media.
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the federal securities laws. All statements other than statements of historical facts are forward-looking statements. These statements often use words such as "believe," "expect," "project," "anticipate," "outlook," "intend," "strategy," "plan," "estimate," "target," "seek," "will," "may," "would," "should," "could," "forecasts," "mission," "strive," "more," "goal" or similar expressions. Forward-looking statements are based on our current expectations, beliefs, strategies, estimates, projections and assumptions, experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments, and other factors we think are appropriate. Such forward-looking statements are based on estimates and assumptions that, while considered reasonable by Cars Commerce and its management based on their knowledge and understanding of the business and industry, are inherently uncertain. While Cars Commerce and its management make such statements in good faith and believe such judgments are reasonable, you should understand that these statements are not guarantees of future strategic action, performance or results. Our actual results, performance, achievements, strategic actions or prospects could differ materially from those expressed or implied by these forward-looking statements. Given these uncertainties, you should not rely on forward-looking statements in making investment decisions. When we make comparisons of results between current and prior periods, we do not intend to express any future trends, or indications of future performance, unless expressed as such, and you should view such comparisons as historical data. Whether or not any such forward-looking statement is in fact achieved will depend on future events, some of which are beyond our control.
Forward-looking statements are subject to a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results and strategic actions to differ materially from those expressed in the forward-looking statements contained in this press release. For a detailed discussion of many of these and other risks and uncertainties, see "Part I, Item 1A., Risk Factors" and "Part II, Item 7., Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission ("SEC") on February 22, 2024 and our other filings filed with the SEC and available on our website at investor.cars.com or via EDGAR at www.sec.gov.
You should evaluate all forward-looking statements made in this press release in the context of these risks and uncertainties. The forward-looking statements contained in this press release are based only on information currently available to us and speak only as of the date of this press release. We undertake no obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, or changes in future operating results over time or otherwise. The forward-looking statements in this report are intended to be subject to the safe harbor protection provided by the federal securities laws.
Cars Commerce Investor Relations Contact:
Katherine Chen
ir@carscommerce.inc
408.768.6847
Cars Commerce Media Contact:
Marita Thomas
mthomas@carscommerce.inc
312.601.5692
Cars.com Inc | ||||
Consolidated Statements of Income | ||||
(In thousands, except per share data) | ||||
(Unaudited) | ||||
Three Months Ended March 31, | ||||
2024 | 2023 | |||
Revenue: | ||||
Dealer | $ 161,815 | $ 149,843 | ||
OEM and National | 15,307 | 13,543 | ||
Other | 3,054 | 3,682 | ||
Total revenue | 180,176 | 167,068 | ||
Operating expenses: | ||||
Cost of revenue and operations | 29,962 | 29,795 | ||
Product and technology | 28,085 | 24,101 | ||
Marketing and sales | 59,163 | 58,297 | ||
General and administrative | 22,857 | 18,304 | ||
Depreciation and amortization | 27,365 | 24,042 | ||
Total operating expenses | 167,432 | 154,539 | ||
Operating income | 12,744 | 12,529 | ||
Nonoperating expense: | ||||
Interest expense, net | (8,321) | (8,244) | ||
Other (expense) income, net | (3,603) | 8,239 | ||
Total nonoperating expense, net | (11,924) | (5) | ||
Income before income taxes | 820 | 12,524 | ||
Income tax expense | 36 | 1,045 | ||
Net income | $ 784 | $ 11,479 | ||
Weighted-average common shares outstanding: | ||||
Basic | 66,318 | 66,530 | ||
Diluted | 67,291 | 67,747 | ||
Earnings per share: | ||||
Basic | $ 0.01 | $ 0.17 | ||
Diluted | 0.01 | 0.17 | ||
Cars.com Inc | ||||
Consolidated Balance Sheets | ||||
(In thousands, except per share data) | ||||
March 31, 2024 | December 31, 2023 | |||
Assets: | (unaudited) | |||
Current assets: | ||||
Cash and cash equivalents | $ 31,363 | $ 39,198 | ||
Accounts receivable, net | 125,670 | 125,373 | ||
Prepaid expenses | 12,494 | 12,553 | ||
Other current assets | 7,644 | 1,314 | ||
Total current assets | 177,171 | 178,438 | ||
Property and equipment, net | 43,379 | 43,853 | ||
Goodwill | 146,104 | 147,058 | ||
Intangible assets, net | 647,302 | 669,167 | ||
Deferred tax assets, net | 108,647 | 112,953 | ||
Investments and other assets, net | 20,528 | 20,980 | ||
Total assets | $ 1,143,131 | $ 1,172,449 | ||
Liabilities and stockholders' equity: | ||||
Current liabilities: | ||||
Accounts payable | $ 25,583 | $ 22,259 | ||
Accrued compensation | 17,996 | 31,669 | ||
Current portion of long-term debt, net | — | 23,129 | ||
Other accrued liabilities | 65,785 | 68,691 | ||
Total current liabilities | 109,364 | 145,748 | ||
Noncurrent liabilities: | ||||
Long-term debt, net | 473,755 | 460,119 | ||
Deferred tax liabilities, net | 8,687 | 8,757 | ||
Other noncurrent liabilities | 69,875 | 65,717 | ||
Total noncurrent liabilities | 552,317 | 534,593 | ||
Total liabilities | 661,681 | 680,341 | ||
Commitments and contingencies | ||||
Stockholders' equity: | ||||
Preferred Stock at par, | — | — | ||
Common Stock at par, | 662 | 659 | ||
Additional paid-in capital | 1,489,525 | 1,500,232 | ||
Accumulated deficit | (1,008,950) | (1,009,734) | ||
Accumulated other comprehensive income | 213 | 951 | ||
Total stockholders' equity | 481,450 | 492,108 | ||
Total liabilities and stockholders' equity | $ 1,143,131 | $ 1,172,449 | ||
Cars.com Inc | ||||
Consolidated Statements of Cash Flows | ||||
(In thousands) | ||||
Three Months Ended March 31, | ||||
2024 | 2023 | |||
Cash flows from operating activities: | ||||
Net income | $ 784 | $ 11,479 | ||
Adjustments to reconcile Net income to Net cash provided by operating activities: | ||||
Depreciation | 6,360 | 4,884 | ||
Amortization of intangible assets | 21,005 | 19,158 | ||
Changes in fair value of contingent consideration | 2,554 | (8,259) | ||
Stock-based compensation | 7,074 | 5,982 | ||
Deferred income taxes | 4,426 | (228) | ||
Provision for doubtful accounts | 741 | 447 | ||
Amortization of debt issuance costs | 738 | 781 | ||
Unrealized loss on foreign currency denominated transactions | 1,009 | — | ||
Amortization of deferred revenue related to AccuTrade Acquisition | — | (883) | ||
Other, net | 217 | 134 | ||
Changes in operating assets and liabilities, net of acquisitions: | ||||
Accounts receivable | (1,155) | (6,552) | ||
Prepaid expenses and other assets | (5,531) | (3,039) | ||
Accounts payable | 3,294 | (859) | ||
Accrued compensation | (13,585) | (6,904) | ||
Other liabilities | 5,537 | 12,000 | ||
Net cash provided by operating activities | 33,468 | 28,141 | ||
Cash flows from investing activities: | ||||
Capitalization of internally developed technology | (5,305) | (5,172) | ||
Purchase of property and equipment | (708) | (199) | ||
Net cash used in investing activities | (6,013) | (5,371) | ||
Cash flows from financing activities: | ||||
Payments of Revolving Loan borrowings and long-term debt | (10,000) | (18,750) | ||
Payments for stock-based compensation plans, net | (8,357) | (9,797) | ||
Repurchases of common stock | (9,096) | (7,100) | ||
Payments of fair value contingent consideration at acquisition date | (7,750) | — | ||
Net cash used in financing activities | (35,203) | (35,647) | ||
Effect of exchange rate changes on Cash and cash equivalents | (87) | — | ||
Net decrease in Cash and cash equivalents | (7,835) | (12,877) | ||
Cash and cash equivalents at beginning of period | 39,198 | 31,715 | ||
Cash and cash equivalents at end of period | $ 31,363 | $ 18,838 | ||
Supplemental cash flow information: | ||||
Cash paid for income taxes | $ 1,168 | $ 96 | ||
Cash paid for interest and swap | 2,566 | 1,486 | ||
Cars.com Inc | ||||||||
Non-GAAP Reconciliations | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
2024 | 2023 | |||||||
Reconciliation of Net income to Adjusted EBITDA | ||||||||
Net income | $ 784 | $ 11,479 | ||||||
Interest expense, net | 8,321 | 8,244 | ||||||
Income tax expense | 36 | 1,045 | ||||||
Depreciation and amortization | 27,365 | 24,042 | ||||||
Stock-based compensation, including related payroll tax expense | 7,950 | 6,952 | ||||||
Transaction-related and other one-time items | 7,169 | (7,425) | ||||||
Non-operating foreign exchange expense | 1,048 | — | ||||||
Adjusted EBITDA | $ 52,673 | $ 44,337 | ||||||
Three Months Ended March 31, | ||||||||
2024 | 2023 | |||||||
Reconciliation of Net income to Adjusted Net income | ||||||||
Net income | $ 784 | $ 11,479 | ||||||
Stock-based compensation, including related payroll tax expense | 7,950 | 6,952 | ||||||
Amortization of intangible assets | 21,005 | 19,158 | ||||||
Transaction-related items | 6,143 | (8,777) | ||||||
Non-operating foreign exchange expense | 1,048 | — | ||||||
Other one-time items | 1,026 | 1,352 | ||||||
Adjusted income tax valuation allowance | — | 714 | ||||||
Income tax impact of adjustments | (9,293) | (4,671) | ||||||
Adjusted net income | $ 28,663 | $ 26,207 | ||||||
Adjusted net income per share, diluted | $ 0.43 | $ 0.39 | ||||||
Weighted-average common shares outstanding, diluted | 67,291 | 67,747 | ||||||
Reconciliation of Net cash provided by operating activities to Free cash flow | ||||||||
Net cash provided by operating activities | $ 33,468 | $ 28,141 | ||||||
Capitalization of internally developed technology | (5,305) | (5,172) | ||||||
Purchase of property and equipment | (708) | (199) | ||||||
Free cash flow | $ 27,455 | $ 22,770 | ||||||
Reconciliation of Operating expenses to Adjusted operating expenses for the Three Months Ended March 31, 2024: | ||||||||
As Reported | Adjustments (1) | Stock-Based | As Adjusted | |||||
Cost of revenue and operations | $ 29,962 | $ — | $ (329) | $ 29,633 | ||||
Product and technology | 28,085 | — | (2,781) | 25,304 | ||||
Marketing and sales | 59,163 | (44) | (1,221) | 57,898 | ||||
General and administrative | 22,857 | (4,570) | (3,619) | 14,668 | ||||
Depreciation and amortization | 27,365 | — | — | 27,365 | ||||
Total operating expenses | $ 167,432 | $ (4,614) | $ (7,950) | $ 154,868 | ||||
Total nonoperating expense, net | $ (11,924) | $ 3,603 | $ — | $ (8,321) | ||||
(1) Includes transaction related items, unrealized loss on foreign currency denominated transactions, severance, transformation and other exit costs, and write-off | ||||||||
Reconciliation of Operating expenses to Adjusted operating expenses for the Three Months Ended March 31, 2023: | ||||||||
As Reported | Adjustments (1) | Stock-Based | As Adjusted | |||||
Cost of revenue and operations | $ 29,795 | $ — | $ (307) | $ 29,488 | ||||
Product and technology | 24,101 | — | (2,057) | 22,044 | ||||
Marketing and sales | 58,297 | — | (1,433) | 56,864 | ||||
General and administrative | 18,304 | (1,917) | (3,155) | 13,232 | ||||
Depreciation and amortization | 24,042 | — | — | 24,042 | ||||
Total operating expenses | $ 154,539 | $ (1,917) | $ (6,952) | $ 145,670 | ||||
Total nonoperating expense, net | $ (5) | $ (8,259) | $ — | $ (8,264) | ||||
(1) Includes transaction related items, severance, transformation and other exit costs, and write-off of long-lived assets and other | ||||||||
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SOURCE Cars Commerce
FAQ
What was the revenue for Q1 2024?
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How much cash flow was generated from operating activities?
What was the change in net income for Q1 2024 compared to the prior year?
