Cars.com Inc. · NYSE:CARS
Cars.com — Q3 2019 Earnings Presentation
21 slides from Cars.com's earnings presentation, Nov 6, 2019
Slide 1: Third Quarter 2019 Earnings
Third Quarter 2019 Earnings November 6, 2019
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 our business strat
Slide 3: Executing on our Strategy in Q3
Executing on our Strategy in Q3 Sales Transformation Consumer Audience Growing Solutions All Affiliates Record Traffic & Unlocking OEM Converted #1 SEO Programs OPERATIONAL EFFICIENCIES 3
Slide 4: Initiatives to Grow Dealer Customers
Initiatives to Grow Dealer Customers 1 2 3 TRAFFIC & SALES PRODUCT LEAD GROWTH TRANSFORMATION INNOVATION 4
Slide 5: Completion of affiliate conversions
Completion of affiliate conversions For the first time in company history, 100% direct control achieved as of October 1, 2019 Direct Dealer Count Direct Sales Team Dealers per Sales Rep # of Dealers # of Sales Employees Dealers / Rep +52% +93% 18,635 450 52 12,257 360 -20% 27 At spin Current At spin
Slide 6: Consistent Audience Growth: Monthly Year-over-Year Traffic Growth
Monthly Year-over-Year Traffic Growth 40% Executing on 35% our strategy: 30% 25% Consistent Audience Growth 20% 15% 10% Traffic (Visits) 5% 0% (5%) (10%) (15%) 6 6
Slide 7: Taking Market Share Throughout 2019
Taking Market Share Throughout 2019 Executing on our strategy: Gaining Market Share of Unique Visitors Source: Comscore 7 7
Slide 8: Executing on our Strategy: SEO Strength Continues
Estimated Monthly SEO Visits | Source: SEMRush Executing on our Strategy: SEO Strength Cars.com CG.com Continues For the first time in over 4 years, we ranked #1 among Share of Voice1 | Source: SEMRush our competitive set for SEO traffic received from Google & other search engines 1 Rank within Goog
Slide 9: Traffic Health and Diversity
The Vast Majority of CARS Traffic is Organic Traffic Health 24% 29% Paid Direct and Diversity Moble App SEO CARS gets more organic traffic than anyone else, 19% improving customer ROI 27% ✓ Lower Cost ✓ Higher Quality ✓ Better ROI 9 9
Slide 10: New OEM partnerships: Significant Opportunities
4,100 U.S. dealers New OEM 1 of 4 approved vendors partnerships: Significant Opportunities 800 U.S. dealers Revenue generation to 1 of 6 approved vendors begin in 2020 Adds 5,000+ new dealer targets 440 dealers in North America 1 of 5 approved vendors 10 10
Slide 11: Q3 2019 Financial Highlights
($ in millions, except per share data) 2019 2018 Revenues $152.1 $169.3 Total Operating Expenses $599.8 * $141.0 Q3 2019 Net (Loss)/Income ($426.2) * $15.8 Financial (Loss)/Earnings per Diluted Share ($6.38) $0.23 Highlights Adjusted Net Income $21.3 $38.4 Adjusted Net Income per Diluted Share $0.32
Slide 12: Q3 2019 Key Operating Metrics
Average Monthly Unique Visitors + 22% YOY Traffic (Visits) + 27% YOY Q3 2019 Mobile Traffic 1 73% Key Operating Direct Monthly ARPD 2 $2,174 Metrics Dealer Customers 18,635 1 Mobile traffic includes mobile browser, mobile app and tablet. 2 ARPD includes revenue from dealer websites and related digit
Slide 13: Sept. 30, 2019 Balance Sheet, Cash Flow & Capitalization
Cash Flows from Operating Activities $80.6 million Free Cash Flow $65.1 million Sept. 30, 2019 Cash $19.8 million Balance Sheet, Debt $666.6 million Cash Flow & Net Leverage Ratio 1 3.4x Capitalization Shares Outstanding 2 66.8 million Enterprise Value 3 $1.5 billion 1 Net Leverage Ratio calculated
Slide 14: Outlook
2019 Revenue growth ~ (6%) to (9%) Outlook Adjusted EBITDA margin ~ 27% to 29% Note: This outlook is forward looking and actual results may differ materially from those presented here. 14
Slide 15: Building Blocks for Our Future
Building Blocks for Our Future 1 2 3 4 Best-in-Class Brand Product Solutions to Efficient Technology Industry-Leading and Consumer Help Customers Sell Systems to Speed Sales and Customer Experience More Cars Innovation Support SUSTAINABLE MARKET LEADERSHIP 15
Slide 16: Questions
Questions 16
Slide 17: Appendix
Appendix 17
Slide 18: Affiliate Conversions: Illustrative
Affiliate Conversions: Illustrative $25 million Increase in Revenue, $30+ million Increase in Adjusted EBITDA, $50+ million Increase in FCF Unaudited Adjustments Conversion of Changes in (a) Affiliates were billed at 60% of retail rates. Affiliate Markets 15% Operating Future Increase/ Upon conversi
Slide 19: Non-GAAP Reconciliations
Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Reconciliation of Net (loss) income to Adjusted EBITDA Net (loss) income $ (426,157) $ 15,797 $ (441,214) $ 29,452 Interest expense, net 7,712 7,005 22,989 20,305 Income tax (benefit) expense (27,869) 5,594 (31,011)
Slide 20: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation discusses Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Net Income per Diluted Share and Free Cash Flow. These are not financial measures as defined by GAAP. These financial measures are presented as supplemental measures of oper
Slide 21: Definitions
Definitions Traffic (Visits). Traffic is critical to our business. Traffic to the Cars.com network of websites and mobile apps provides value to our advertisers in terms of audience, awareness, consideration and conversion. In addition to tracking traffic volume and sources, we monitor activity on o