Cars.com Inc. · NYSE:CARS
Cars.com — Investor Presentation (May 2017)
39 slides from Cars.com's investor presentation, May 16, 2017
Slide 1: Cars.com Investor Presentation May 2017
CARS.COM Investor Presentation MAY 2017
Slide 2: Safe Harbor Statement
Safe Harbor Statement Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the federal securities laws, including those statements under “Financial Objectives.” All statements other than statements of historical facts are forward-looking statements
Slide 3: Spin-off Transaction Summary
Spin-off Transaction Summary 1 Based Overview on Listing Distribution Capital structure In September 2016, TEGNA announced its plans to separate Cars.com from TEGNA in a tax-free spin-off Cars.com is a leading digital automotive marketplace, delivering significant value to consumers, dealers and OEM
Slide 4: Cars.com Spin-off Rationale
Cars.com Spin-off Rationale Augment the core business with greater financial, operational and strategic focus Tailor capital structure based on profitability, cash flow and growth opportunities Enhance opportunity to pursue targeted organic growth initiatives Improve flexibility to pursue value-enha
Slide 5: Company Overview
Company Overview Alex Vetter, Co-Founder and Chief Executive Officer
Slide 6: We are a Two-Sided Digital Marketplace
We are a Two-Sided Digital Marketplace We empower consumers by connecting them to the resources they need to make better automotive decisions about product, price, place and person We enable partners by connecting them to the in-market audience and intelligence they need to increase turn and gain ma
Slide 7: Cars.com Improves Car Decision Making by Connecting Buyers and Sellers
Cars.com Improves Car Decision Making by Connecting Buyers and Sellers More Intelligently and Efficiently Audience Connections Partners New & used shoppers Dealers Vehicle sellers OEMs Advice seekers/ Sell-it-yourself enthusiasts consumers
Slide 8: Cars.com at a Glance
Cars.com at a Glance Market-leading revenue in large ~$630MM ~$30BN 2 addressable market Revenue1 Market opportunity Diversified customer base 20,000+ 100% Dealer partners Top OEM clients #1 +15% 4 Leading mobile experience YoY mobile app traffic Mobile app3 growth Rich inventory attracts market- 4.
Slide 9: Key Investment Highlights
Key Investment Highlights Leading, branded digital automotive marketplace for buyers and sellers Large and attractive market with growing digital ad spend Trusted, unbiased content Innovative mobile-first technology platform Market leading connections that drive partner results Attractive cash flow
Slide 10: Cars.com Operates at the Center of an Enormous and Fragmented Ecosystem
Cars.com Operates at the Center of an Enormous and Fragmented Ecosystem Products Service and Repair Used Cars New Cars 30+ OEMs3 1,000+ 42,000+ Digital Automotive Dealers2>1,600 Destinations1 models / trims per year4 Participants 1 Vertical Scope; 2 Borrell 2016 Auto Outlook; 3 IHS Markit; 4 Cars.co
Slide 11: Our Brand is Synonymous with Car Shopping
Our Brand is Synonymous with Car Shopping #1 in Brand Awareness1 Cars.com66% Autotrader KBB Edmunds TrueCar CarGurus 1Millward Brown Brand Tracker FY
Slide 12: U.S. Automotive Industry is a Massive Market
U.S. Automotive Industry is a Massive Market U.S. Automotive $1.1 New Car Sales17.6 Market1 in 2016 2 Trillion Million Aftermarket Parts $263 Used Car Sales44.4 and Services3 in 2016 4 Billion Million 1US Census Bureau Monthly Retail Trade Survey; 2IHS Markit; 3Statista Automotive Aftermarket; 4Borr
Slide 13: Auto Advertising Industry is a Large and Attractive Market
Auto Advertising Industry is a Large and Attractive Market with Growing Digital Ad Spend $16bn1 / 52% $26bn1 / 67% digital digital $30BN1 $39BN1 2016 U.S. auto 2021 U.S. auto ad market ad market U.S. Automotive Advertising Market 5% Growth 2016 – 2021E CAGR U.S. Digital Automotive Advertising Market
Slide 14: Automotive Decisions are Being Made Digitally
Automotive Decisions are Being Made Digitally 10 years ago, the average car shopper made 5 visits 95% 20% to Dealerships… of Consumers of Audience3 …Today that number has dropped to 1.6 1 use Digital Sources when is captured by Shopping for a Car2 Cars.com3 1 McKinsey; 2 The Role of Digital and Deal
Slide 15: Expert Advice and Unbiased Coverage Empower Consumers
Expert Advice and Unbiased Coverage Empower Consumers in the Auto-buying Process
Slide 16: Video: Cars.com Knows Cars
Video: Cars.com Knows Cars
Slide 17: Unique Platform Empowers our Audience to Make Better Decisions
Unique Platform Empowers our Audience toMake Better Decisions Better Decisions
Slide 18: Cars.com Shoppers are In-market, Undecided, Unduplicated, and Sought After
Cars.com Shoppers are In-market, Undecided, Unduplicated, and Sought After % of Cars.com users that don’t use:2 80% 96% AutoTrader.com79%#1 CarGurus.com77% 80% of Cars.com 96% of Cars.com KBB.com75%#1 demographic of shoppers shoppers are young, affluent say they plan to undecided on what or Edmunds.
Slide 19: Industry-Leading, Mobile-First Platform
Industry-Leading, Mobile-First Platform Best-in-class versus top competitors… Award-winning app… #1 App Rating 1 Above peer average in all mobile dimensions 3 (e.g., speed, navigation) #1 Most Downloaded App2 …with tangible results #1 Mobile Experience Rating 3 Average mobile user is within #1 Highe
Slide 20: Cars.com Generates Innovative, Measurable Results for Partners
Cars.com Generates Innovative, Measurable Results for Partners Industry-leading Connections for Partners Dealer Dashboard Overview Phone Leads Email Leads Traffic to Dealer & OEM Websites Mobile Walk-ins Actionable Insights
Slide 21: Differentiated Salesforce Provides Market Expertise and Unmatched Service
Differentiated Salesforce Provides Market Expertise and Unmatched Service, at Scale National Major Advertising Major Accounts OEMs Accounts Affiliate Affiliate ~500 ~20,000 Person Total salesforce partners Field & Inside Direct Sales Deliver unique Strong relationships Provide deep local solutions t
Slide 22: We are Investing to Position the Business for the Future
We are Investing to Position the Business for the Future Challenge Response Entrance of New Players Neutralized new players with innovative pricing tools and features Restoring speed and adding Re-platforming agility for innovation Near-term drag, Affiliate Performance medium-term upside
Slide 23: Five Pillars of Long-Term Growth
Five Pillars of Long-TermGrowth AdvertiserConnections ExpansionGrowth Adjacencies & Extensions AffiliateData & Attribution OpportunityLeadership
Slide 24: Experienced Leadership Team Driving Transformative Growth
Experienced Leadership Team Driving Transformative Growth CEO and CFO Veteran Team Members Alex Vetter Becky JohnGregElaine Co-Founder & Sheehan ClavadestcherMcGivneyRichards Chief Executive Chief Financial Chief RevenueChief StrategyEVP Business Officer Officer OfficerOfficerOperations Recent Addit
Slide 25: Financial Overview
Financial Overview Becky Sheehan, Chief Financial Officer
Slide 26: Financial Highlights
Financial Highlights Attractive Business +Growth Investment=Compelling Attributes Long Term Model Recurring revenue Advertiser expansion Large market opportunity Strong cash flow generation Connections growth Proven revenue model Significant scale Adjacencies and extensions Strong balance sheet Data
Slide 27: Highly Diversified Customer Base with No Significant Customer Concentration
Highly Diversified Customer Base with No Significant Customer Concentration MonetizationDrivers Retail Revenue Subscription fees (53%) Brand strength 73% OEM and national advertising (18%) Adjacencies (2%) Dealer membership $463mm Sold by direct salesforce Advertising sell through Wholesale Revenue
Slide 28: Key Operating Metrics
Key Operating Metrics Total Traffic Total Dealers2Average Vehicle Inventory (in Millions)1 (in Millions) 4.7 422.6 433.7 412.320,10920,91821,5724.5 4.3 2014A 2015A 2016A2014A2015A2016A2014A2015A2016A 1 Source: ComScore 2 Showing year end dealer count
Slide 29: Annual Revenue and Adjusted EBITDA Growth
Annual Revenue and Adjusted EBITDA Growth Revenue ($ in Millions) Adjusted EBITDA1 ($ in Millions) Retail Wholesale % CAGR % CAGR 10% 48% $597 $633 $515 $260 172 170$239 $119 425 463 2014A 2015A 2016A2014A2015A2016A 1 Adjusted EBITDA is a non-GAAP financial measure. For more information and reconcil
Slide 30: Quarterly Performance
Quarterly Performance Quarterly Revenue ($ in Millions) Mild seasonality in line with broader auto advertising market Q1 2017: Revenue – Modest growth in retail $144 $152 $153$148$157$150$162$154$162partially offset by 5% decline in wholesale Profitability impacted by marketing costs, public company
Slide 31: Significant Platform Evolution Achieved with Capital Light Model
Significant Platform Evolution Achieved with Capital Light Model Capital Expenditures ($ in Millions) Product Expansion Through Accelerating Internal Developmental Cycles Complementary Acquisitions2016AToday Low capital requirements provide Recent re-platforming investment significant strategic flex
Slide 32: Affiliate Agreement Highlights
Affiliate Agreement Highlights Overview InceptionImpact affiliate relationships Original wholesale $25 million revenue $170 million of revenue in agreements did not reflectamortization annually 2016 (including $25 million of fair market valuethrough expiration of revenue amortization) Contracts rene
Slide 33: Affiliate Agreement Highlights
Affiliate Agreement Highlights Overview InceptionImpact affiliate relationships Original wholesale $25 million revenue $170 million of revenue in agreements did not reflectamortization annually 2016 (including $25 million of fair market valuethrough expiration of revenue amortization) Contracts rene
Slide 34: Financial Targets
Financial Targets 2016A 2017TargetMid Term Revenue Growth 6.1% 0.0%- 2.0%5.0%- 10.0% Adjusted EBITDA Margin 41.0% 38.0%- 40.0%34.0%- 37.0% Note: These objectives are forward looking, and are subject to change.
Slide 35: Cars.com
CARS.COM Investor Presentation MAY 2017
Slide 36: Closing Remarks
Closing Remarks
Slide 37: Appendix
Appendix 35
Slide 38: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Calendar year end December 31, ($ 000s) 2014A 2015A2016A Revenue $514,854 $596,510$633,106 % growth 15.9%6.1% Product support, technology and operations 115,525 116,690129,864 Gross Profit $399,329 $479,820$503,242 % gross margin 77.6% 80.4%79.5% Marketing and sales 21
Slide 39: Cars.com
CARS.COM Investor Presentation MAY 2017