Cars.com Inc. · NYSE:CARS
Cars.com — Q3 2023 Earnings Presentation
25 slides from Cars.com's earnings presentation, Nov 2, 2023
Slide 1: Third Quarter 2023 Earnings
Third Quarter 2023 Earnings November 2, 2023 1
Slide 2: Forward-looking Statements
Forward-looking Statements This presentation contains "forward-looking statements" within the meaning of the federal securities laws. All statements other than statements of historical facts are forward-looking statements. Forward-looking statements include information concerning goals, plans, expec
Slide 3: Definitions: Non-GAAP Financial Measures
Definitions: Non-GAAP Financial Measures This presentation discusses Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Operating Expenses and Free Cash Flow. These financial measures are not prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). These fin
Slide 4: Cars Commerce Acquires D2C Media
Platform Strategy Cars Commerce Acquires D2C Media Leading automotive technology and digital solutions provider in Canada Proudly a Canadian Company 4
Slide 5: Accelerated Growth in Q3 2023
Accelerated Growth in Q3 2023 ARPD Growth, Improved QOQ Revenue Growth, +9% YOY Adjusted EBITDA, +6% YOY 28% Margin 5
Slide 6: Simplified Go-to-Market Strategy To Drive Sustainable Growth in Subscription Revenue
Simplified Go-to-Market Strategy To Drive Sustainable Growth in Subscription Revenue SOLUTIONS Marketplace Digital Experience Trade & Appraisal Media 6
Slide 7: My Garage Keeps Consumers Engaged Between Purchases
Marketplace My Garage Keeps Consumers Engaged Between Purchases ● New marketplace feature connects retail data to real-time trade-in values ● Helps consumers track the value of their vehicle over time to know the optimal time to trade or sell 7
Slide 8: Largest Review Platform in the Industry
Marketplace Largest Review Platform in ~9K Dealers Enable the Industry Instant Financing 13MM dealer reviews Sarah M. Thank you Wittler Motors! I got an instant offer on my current vehicle and then Jake took it from there. So easy. I’m never going anywhere else. 8
Slide 9: Marketplace Repackaging Driving ARPD, With Only Modest Impact to Dealer Customers
Dealer Customers Marketplace Repackaging Driving ARPD, With Only Modest Impact to Dealer Customers ARPD Dealer Customers +9% YOY Note: The decline of the digital dealer industry negatively impacted our Dealer Customer count by over 650 cancellations (which started in Q2’22). There are effectively no
Slide 10: 26MM Cars Commerce Media Network Drives Retail Sales Results
Media 26MM monthly in-market Cars Commerce Media shoppers Network Drives Retail Sales Results ● Leveraging the Cars.com audience across video, social and display advertising, improves dealer website traffic by 30%+¹ ● National OEM advertising buy on Cars.com generates double-digit lift in leads² on
Slide 11: Continued Adoption of Our Digital Solutions
Solutions Continued Adoption of Our Digital Solutions Dealer Inspire Website Customers Accu-Trade Connected Customers ~6,350 ~850 +8% +400 YOY YOY 11
Slide 12: Welcome D2C Media
Platform Strategy Welcome D2C Media ● Expands Cars Commerce platform in Canada ● ~1,000 dealer customers ● Website endorsements covering ~60% of OEMs operating in Canada ● D2C Media generates profitable top-line growth ● Experienced local Canadian team 12
Slide 13: Expanded and Advanced Our Platform Strategy
Expanded and Advanced Our Platform Strategy Recognized as Grew Dealer Expanded “Best Launched Revenue Growth Companies to Cars Commerce & OEM Sales Opportunities Work For in 2024” 13
Slide 14: Revenue Growth of +6% YOY
Revenue Revenue Growth of +6% YOY Quarterly Revenue ($MM) Drivers of Revenue Growth ● Dealer Revenue +8% YOY driven by growth in solutions, media upsells and Marketplace Repackaging Initiative Dealer Revenue ● OEM & National down 2% YOY, +8% YOY however OEM Revenue was up double- digits YOY ● Other
Slide 15: Disciplined Investment in Growth
Operating Expenses Disciplined Investment in Growth Quarterly Adjusted Operating Expense ($MM) Drivers of Changes in Expense ● YOY and sequential increase in Marketing and sales due to investment in the Cars.com advertising campaign, in-person employee events, and compensation expense ● YOY increase
Slide 16: Continued Sequential Improvement in Adjusted EBITDA
Adjusted EBITDA Continued Sequential Improvement in Adjusted EBITDA Quarterly Adjusted EBITDA ($MM) & Margin (% Revenue) Drivers of Adjusted EBITDA ● Adjusted EBITDA margin improved 125bps sequentially ● YOY variance in Adjusted EBITDA reflects continued investment in the business, including higher
Slide 17: Strength Across Key Operating Metrics
Operating Metrics Strength Across Key Operating Metrics Q3 2023 Q3 2022 AVERAGE MONTHLY UNIQUE 26.0 MM 27.3 MM VISITORS TRAFFIC (VISITS) 151.4 MM 150.4 MM MONTHLY ARPD 1 $2,548 $2,334 DEALER CUSTOMERS 2 18,715 19,585 ¹ARPD excludes revenue from Dealer Inspire digital advertising services. 2Note: The
Slide 18: Robust Cash Flow, Solid Balance Sheet
Cash Flow Robust Cash Flow, Solid Balance Sheet YTD Free Cash Flow Trend ($MM) Total Debt ($MM) & Net Leverage Ratio Includes $9MM Tax Refund Related to CARES Act Reflects borrowing to fund Accu-Trade acquisition Total Debt Total Net Leverage Ratio 18
Slide 19: Q4 2023 Outlook
Outlook Q4 2023 Outlook ● Q4 Revenue: $177.0 to $179.0 million ○ Represents 5.2% to 6.4% YOY growth ○ Includes Revenue from D2C Media Inc, which is expected to contribute ~1.5% of total Revenue dollars in the quarter ● Q4 Adjusted EBITDA margin: 29.5% to 30.5% 19
Slide 20: Q&A
Q&A 20
Slide 21: Upcoming IR Marketing Schedule
Upcoming IR Marketing Schedule ● November 15: RBC Capital Markets Global Technology, Internet, Media Telecommunication Conference in New York ● November 16: D.A. Davidson Technology Summit ● November 20: Needham 3rd Annual Consumer Technology / E-Commerce Virtual Conference 21
Slide 22: Appendix
Appendix 22
Slide 23: Non-GAAP Reconciliations
Non-GAAP Reconciliations (unaudited and in thousands) 23
Slide 24: Non-GAAP Reconciliations
Non-GAAP Reconciliations (unaudited and in thousands) 24
Slide 25: Non-GAAP Reconciliations
Non-GAAP Reconciliations (unaudited and in thousands) 25