Cars.com Inc. · NYSE:CARS
Cars.com — Q2 2024 Earnings Presentation
25 slides from Cars.com's earnings presentation, Aug 8, 2024
Slide 1: Second Quarter 2024 Earnings
Second Quarter 2024 Earnings August 8, 2024
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. These statements often use words such as “believe,” “expect,” “project,” “ant
Slide 3: Definitions: Non-GAAP Financial Measures
Definitions: Non-GAAP Financial Measures This presentation 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 the United States
Slide 4: Delivered Year-Over-Year Growth and Margin Expansion
Delivered Year-Over-Year Growth and Margin Expansion Quarterly Adj. EBITDA ($MM) Quarterly Revenue ($MM) Dealer Customers & Margin (% Revenue) 28.2% 27.1% $179 19,390 $50 $168 19,381 $46 Q2 ‘23 Q2 ‘24 Q1 ‘24 Q2 ‘24 Q2 ‘23 Q2 ‘24 +6% YoY Growth Positive QoQ Growth 28% Adj. EBITDA Margin 4
Slide 5: Delivered Fifteenth Consecutive Quarter of YoY Revenue Growth
Delivered Fifteenth Consecutive Quarter of YoY Revenue Growth Q2 KEY GROWTH DRIVERS Grow Transform OEM Consumer Grow Dealers Relationships Engagement Continuing to execute on our platform strategy 5
Slide 6: OEM and National revenue +28% YoY
OEM and National revenue +28% YoY OEM & National Q2 Revenue ($MM) $15.8 ● Higher vehicle inventory levels driving OEM demand for our solutions ● New car inventory up 13% YoY in 1H’241 and new model launches expected to stay strong into 2H’24 1 Cars Commerce Industry Insights Report, July 2024 6
Slide 7: Increased OEM interest in media products
Increased OEM interest in media products ● Approximately two-thirds of OEM customers increased marketing and advertising investments in Cars Commerce products and solutions during Q2 ● Won two new OEM partners during Q2 7
Slide 8: Expanded dealer count while maintaining ARPD
Expanded dealer count while maintaining ARPD Dealer Customers Q2 Average Revenue Per Dealer $2,474 19,390 Note: The decline of the digital dealer industry negatively impacted our Dealer Customer count by over 650 cancellations (which started in Q2’22). There are effectively no digital dealers in our
Slide 9: Driving adoption of the Cars Commerce platform
Driving adoption of the Cars Commerce platform Marketplace Digital Trade & Media Experience Appraisal Pursuing additional cross-selling opportunities in 2H’24 9
Slide 10: AccuTrade powers 639,000 appraisals in Q2
AccuTrade powers 639,000 appraisals in Q2 AccuTrade Connected Customers ~900 ● AccuTrade appraisals are 34% more accurate than competitor solutions1 ● Total appraisals up 3% QoQ ● Seeing improvement in customer engagement following changes to onboarding, account support and product education 1 Cars
Slide 11: AccuTrade wins multiple OEM endorsements
AccuTrade wins multiple OEM endorsements ● AccuTrade has been certified by Stellantis Digital as a trade and appraisal solution for its U.S. based retailers ● JLR has selected AccuTrade as the Trade & Appraisal solution partner for their new digital retail experience for their four brands: Range Rove
Slide 12: Consistent digital experience solutions growth
Consistent digital experience solutions growth Website Customers 7,520 ● Powered 7,520 websites for DI and D2C at end of Q2, up 21% YOY ● D2C became #1 dealer website provider in Canada *Website customer data includes D2C Media effective Q4’23 12
Slide 13: Improved consumer marketplace engagement
Improved consumer marketplace engagement Q2 Total Traffic (MM) 158.1 ● More than 26 million average monthly visitors ● Repeat visitation ~7% higher year-over-year exiting Q2 ● Annual American Made Index published in June 2024 ● Committed to delivering more innovative content and technology to to cap
Slide 14: Revenue growth of +6% YoY
Revenue growth of +6% YoY Quarterly Revenue ($MM) ● Dealer Revenue +4% YoY, driven by D2C Media contribution and growing product penetration ● OEM & National +28% YoY, driven by additional investment to raise consumer awareness amid rising inventory levels ● Q2 revenue includes a roughly 1% impact f
Slide 15: Disciplined investment in growth
Disciplined investment in growth Quarterly Adjusted Operating Expense ($MM) ● Adjusted operating expenses +6% YoY ● Driven by product and technology investments, primarily related to headcount and third-party licenses Note: We define Adjusted Operating Expenses as total operating expenses adjusted to
Slide 16: Continued Adjusted EBITDA improvement
Continued Adjusted EBITDA improvement Quarterly Adjusted EBITDA ($MM) & Margin (% Revenue) ● Adjusted EBITDA margin of 28.2%, 100+ bps YoY ● Adjusted EBITDA grew $5MM, +10% YoY 16
Slide 17: Strength across Key Operating Metrics
Strength across Key Operating Metrics Q2 2024 Q2 2023 AVERAGE MONTHLY UNIQUE 26.1 MM 26.9 MM VISITORS 1 TRAFFIC (VISITS) 1 158.1 MM 156.0 MM MONTHLY ARPD 2 $2,474 $2,472 DEALER CUSTOMERS 3 19,390 18,785 1 UVs and Traffic were measured via Adobe Analytics prior to December 31, 2023, and measured via Ru
Slide 18: Robust cash flow and solid balance sheet
Robust cash flow and solid balance sheet YTD Free Cash Flow Trend ($MM) Total Debt ($MM) & Net Leverage Ratio Reflects borrowing to fund AccuTrade acquisition Reflects borrowing to fund D2C Media acquisition Total Debt Total Net Leverage Ratio 18
Slide 19: Outlook
Outlook Q3 2024 OUTLOOK ● Q3 Revenue: $178.0 to $181.0 million Represents 2% to 4% YoY growth ● Q3 Adjusted EBITDA margin: 26.5% to 28.5% FULL YEAR 2024 OUTLOOK ● Revised Full Year Revenue: 4.5% to 5.5% YoY growth ● Reaffirmed Adjusted EBITDA margins: 28% to 30% 19
Slide 20: Q&A
Q&A 20
Slide 21: Appendix
Appendix 21
Slide 22: Non-GAAP Reconciliations
Non-GAAP Reconciliations (unaudited and in thousands) 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