[10-Q] Cars.com Inc. Quarterly Earnings Report
j
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
b
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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(Address of principal executive offices)
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Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act: |
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Title of each class |
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Trading Symbol |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of July 31, 2025, the registrant had
Table of Contents
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Page |
PART I. |
FINANCIAL INFORMATION |
2 |
Item 1. |
Financial Statements: |
2 |
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Consolidated Balance Sheets |
2 |
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Consolidated Statements of Income |
3 |
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Consolidated Statements of Comprehensive Income |
4 |
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Consolidated Statements of Stockholders’ Equity |
5 |
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Consolidated Statements of Cash Flows |
6 |
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Notes to the Consolidated Financial Statements (Unaudited) |
7 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
15 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
23 |
Item 4. |
Controls and Procedures |
23 |
PART II. |
OTHER INFORMATION |
24 |
Item 1. |
Legal Proceedings |
24 |
Item 1A. |
Risk Factors |
24 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
24 |
Item 3. |
Defaults Upon Senior Securities |
24 |
Item 4. |
Mine Safety Disclosures |
24 |
Item 5. |
Other Information |
24 |
Item 6. |
Exhibits |
26 |
Signatures |
27 |
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1
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Cars.com Inc.
Consolidated Balance Sheets
(In thousands, except per share data)
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June 30, 2025 |
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December 31, 2024 |
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(unaudited) |
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Assets: |
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Current assets: |
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Cash and cash equivalents |
$ |
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$ |
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Accounts receivable, net |
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Prepaid expenses |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Goodwill |
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Intangible assets, net |
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Deferred tax assets |
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Investments and other assets, net |
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Total assets |
$ |
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$ |
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Liabilities and stockholders' equity: |
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Current liabilities: |
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Accounts payable |
$ |
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$ |
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Accrued compensation |
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Other accrued liabilities |
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Total current liabilities |
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Noncurrent liabilities: |
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Long-term debt, net |
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Deferred tax liabilities |
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Other noncurrent liabilities |
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Total noncurrent liabilities |
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Total liabilities |
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Commitments and contingencies |
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Stockholders' equity: |
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Preferred Stock at par, $ |
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Common Stock at par, $ |
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Additional paid-in capital |
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Accumulated deficit |
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( |
) |
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( |
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Accumulated other comprehensive loss |
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( |
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( |
) |
Total stockholders' equity |
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Total liabilities and stockholders' equity |
$ |
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$ |
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The accompanying notes are an integral part of the Consolidated Financial Statements.
2
Cars.com Inc.
Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2025 |
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2024 |
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2025 |
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2024 |
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Revenue: |
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Dealer |
$ |
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$ |
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$ |
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$ |
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OEM and National |
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Other |
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Total revenue |
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Operating expenses: |
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Cost of revenue and operations |
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Product and technology |
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Marketing and sales |
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General and administrative |
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Depreciation and amortization |
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Total operating expenses |
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Operating income |
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Nonoperating expenses: |
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Interest expense, net |
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( |
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( |
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( |
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( |
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Other income, net |
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Total nonoperating (expense) income, net |
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( |
) |
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( |
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( |
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Income before income taxes |
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Income tax expense |
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Net income |
$ |
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$ |
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$ |
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$ |
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Weighted-average common shares outstanding: |
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Basic |
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Diluted |
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Earnings per share: |
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Basic |
$ |
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$ |
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$ |
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$ |
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Diluted |
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The accompanying notes are an integral part of the Consolidated Financial Statements.
3
Cars.com Inc.
Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)
|
Three Months Ended June 30, |
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Six Months Ended June 30, |
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2025 |
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2024 |
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2025 |
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2024 |
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Net income |
$ |
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$ |
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$ |
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$ |
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Other comprehensive income (loss), net of tax: |
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Foreign currency translation adjustments |
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( |
) |
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( |
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Total other comprehensive income (loss), net of tax |
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( |
) |
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( |
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Comprehensive income |
$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of the Consolidated Financial Statements.
4
Cars.com Inc.
Consolidated Statements of Stockholders’ Equity
(In thousands)
(Unaudited)
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Preferred Stock |
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Common Stock |
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Additional |
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Accumulated |
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Accumulated |
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Stockholders' |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Deficit |
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Loss |
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Equity |
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Balance at December 31, 2024 |
|
— |
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$ |
— |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Other comprehensive loss, net of tax |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Repurchases of common stock |
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— |
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— |
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( |
) |
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( |
) |
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( |
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— |
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— |
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( |
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Shares issued in connection with |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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Balance at March 31, 2025 |
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— |
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— |
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( |
) |
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( |
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Net income |
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— |
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— |
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— |
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— |
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— |
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— |
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Other comprehensive income, net of tax |
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— |
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— |
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— |
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— |
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— |
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— |
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Repurchases of common stock |
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— |
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— |
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( |
) |
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( |
) |
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( |
) |
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— |
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— |
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( |
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Shares issued in connection with |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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Balance at June 30, 2025 |
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— |
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$ |
— |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Preferred Stock |
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Common Stock |
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Additional |
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Accumulated |
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Accumulated |
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Stockholders' |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Deficit |
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Income (Loss) |
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Equity |
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Balance at December 31, 2023 |
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— |
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$ |
— |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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— |
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— |
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Other comprehensive loss, net of tax |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Repurchases of common stock |
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— |
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— |
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( |
) |
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( |
) |
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( |
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— |
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— |
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( |
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Shares issued in connection with |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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Balance at March 31, 2024 |
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— |
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— |
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( |
) |
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Net income |
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— |
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— |
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— |
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— |
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— |
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— |
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Other comprehensive loss, net of tax |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Repurchases of common stock |
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— |
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— |
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( |
) |
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( |
) |
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( |
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— |
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— |
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( |
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Shares issued in connection with |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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Balance at June 30, 2024 |
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— |
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|
$ |
— |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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The accompanying notes are an integral part of the Consolidated Financial Statements.
5
Cars.com Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
|
Six Months Ended June 30, |
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2025 |
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2024 |
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Cash flows from operating activities: |
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Net income |
$ |
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$ |
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Adjustments to reconcile Net income to Net cash provided by operating activities: |
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Depreciation |
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Amortization of intangible assets |
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Stock-based compensation |
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Deferred income taxes |
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Provision for doubtful accounts |
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Amortization of debt issuance costs |
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Unrealized (gain) loss on foreign currency denominated transactions |
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( |
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Changes in fair value of contingent consideration |
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( |
) |
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Other, net |
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Changes in operating assets and liabilities, net of acquisitions: |
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Accounts receivable |
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( |
) |
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Prepaid expenses and other assets |
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( |
) |
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Accounts payable |
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( |
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Accrued compensation |
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( |
) |
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( |
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Other liabilities |
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( |
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( |
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Net cash provided by operating activities |
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Cash flows from investing activities: |
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Payments for acquisitions, net of cash acquired |
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( |
) |
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( |
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Capitalization of internally developed technology |
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( |
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( |
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Purchase of property and equipment |
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( |
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( |
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Proceeds from sale of equity investment |
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Net cash used in investing activities |
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( |
) |
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( |
) |
Cash flows from financing activities: |
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Proceeds from Revolving Loan borrowings |
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Payments of Revolving Loan borrowings and long-term debt |
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( |
) |
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( |
) |
Payments for stock-based compensation plans, net |
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( |
) |
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( |
) |
Repurchases of common stock |
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( |
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( |
) |
Payments of contingent consideration |
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( |
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Payments of debt issuance costs and other fees |
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( |
) |
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Net cash used in financing activities |
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( |
) |
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( |
) |
Effect of exchange rate changes on Cash and cash equivalents |
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( |
) |
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( |
) |
Net decrease in Cash and cash equivalents |
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( |
) |
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( |
) |
Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
$ |
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$ |
|
||
Supplemental cash flow information: |
|
|
|
|
|
||
Cash paid for income taxes |
$ |
|
|
$ |
|
||
Cash paid for interest |
|
|
|
|
|
||
|
|
|
|
|
|
||
The accompanying notes are an integral part of the Consolidated Financial Statements.
6
Cars.com Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
NOTE 1. Description of Business and Summary of Significant Accounting Policies
Description of Business. Cars.com Inc., d/b/a Cars Commerce Inc. (the "Company" or "Cars Commerce") is an audience-driven technology company empowering the automotive industry. The Company simplifies everything about car buying and selling with powerful products powered by data and machine learning that span pretail, retail and post-sale activities – enabling more efficient and profitable retail operations. The Cars Commerce platform is organized around five industry-leading capabilities: the flagship automotive marketplace and dealer reputation site Cars.com, award-winning website and digital retail technology and marketing services from Dealer Inspire and D2C Media, essential trade-in and appraisal technology from AccuTrade, a reputation-based dealer-to-dealer wholesale auction from DealerClub and exclusive in-market media solutions from the Cars Commerce Media Network.
Basis of Presentation. The accompanying unaudited interim consolidated financial statements ("Consolidated Financial Statements") have been prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") and the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim financial statements. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the SEC rules and regulations. These Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2024, which are included in the Company's Annual Report on Form 10-K as filed with the SEC on February 27, 2025 (the "December 31, 2024 Consolidated Financial Statements").
The significant accounting policies used in preparing these Consolidated Financial Statements were applied on a basis consistent with those reflected in the December 31, 2024 Consolidated Financial Statements. In the opinion of management, the Consolidated Financial Statements contain all adjustments (consisting of a normal, recurring nature) necessary to present fairly the Company's financial position, results of operations, cash flows and changes in stockholders' equity as of the dates and for the periods indicated. The unaudited results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of results that may be expected for the year ending December 31, 2025.
Use of Estimates. The preparation of the accompanying Consolidated Financial Statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect amounts reported in the Consolidated Financial Statements and accompanying disclosures. Although these estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future, actual results may differ from those estimates.
Reclassifications. Certain prior year balances have been reclassified to conform to the current year presentation. These reclassifications were not material to the previously reported Consolidated Financial Statements.
Recently Issued Accounting Standards Not Yet Adopted. In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03, Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires companies to provide more detailed and organized disclosures of their expenses in their income statements. The standard requires breaking down expenses into specific categories, such as employee compensation and costs related to depreciation and amortization. This amendment is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, on a prospective basis and early adoption and retrospective application is permitted. The Company is currently evaluating this new guidance and its impact on its Consolidated Financial Statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires presentation of specific categories of reconciling items, as well as reconciling items that meet a quantitative threshold, in the reconciliation between the income tax provision and the income tax provision using statutory tax rates. The standard also requires disclosure of income taxes paid disaggregated by jurisdiction with separate disclosure of income taxes paid to individual jurisdictions that meet a quantitative threshold. This amendment is effective for fiscal years beginning after December 15, 2024, on a prospective basis and early adoption and retrospective application are permitted. The Company is currently evaluating this new guidance and its impact on its Consolidated Financial Statements and related disclosures.
7
Cars.com Inc.
Notes to the Consolidated Financial Statements (continued)
(Unaudited)
NOTE 2. Revenue
The Company's Consolidated Statements of Income provide disaggregated revenue information that reflects the nature, timing, amount and uncertainty of cash flows related to the Company's revenue. Substantially all revenue was generated and located within the U.S.
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Dealer |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
OEM and National |
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenue |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
NOTE 3. Business Combinations
DealerClub Acquisition. In January 2025, the Company acquired all of the outstanding stock of DealerClub Inc. ("DealerClub"), an emerging dealer-to-dealer digital wholesale auction platform that facilitates transparent and efficient transactions between automotive dealers (the "DealerClub Acquisition"). The total purchase consideration was $
As part of the DealerClub Acquisition, the Company may be required to pay additional performance-based consideration of up to $
Preliminary Purchase Price Allocation. The preliminary fair values assigned to the tangible and intangible assets acquired and liabilities assumed were determined based on management’s estimates and assumptions, as well as other information compiled by management, including third-party valuations that utilize customary valuation procedures and techniques, such as the replacement cost method. The preliminary fair values of all assets acquired and liabilities assumed are subject to change within the one-year measurement period as the Company finalizes the valuation of the assets and liabilities of the acquired business.
|
Preliminary |
|
|
Total purchase consideration |
$ |
|
|
|
|
|
|
Cash and cash equivalents (1) |
$ |
|
|
Other assets acquired (1)(2) |
|
|
|
Identified intangible assets (3) |
|
|
|
Total assets acquired |
|
|
|
Total liabilities assumed (4) |
|
( |
) |
Net identifiable assets |
|
|
|
Goodwill |
|
|
|
Total purchase consideration |
$ |
|
|
8
Cars.com Inc.
Notes to the Consolidated Financial Statements (continued)
(Unaudited)
A reconciliation of cash consideration to Payments for acquisitions, net of cash acquired related to the DealerClub Acquisition in the Consolidated Statements of Cash Flows is as follows (in thousands):
Cash consideration |
$ |
|
|
Less: Cash acquired (1) |
|
( |
) |
Total payment for DealerClub Acquisition, net |
$ |
|
Goodwill. In connection with the DealerClub Acquisition, the Company recorded goodwill in the amount of $
The DealerClub Acquisition would have had an immaterial impact on the Company’s Consolidated Financial Statements for the three and six months ended June 30, 2024.
NOTE 4. RepairPal Equity Investment
During the fourth quarter of 2024, the Company sold its RepairPal equity investment, which included $
NOTE 5. Debt
As of June 30, 2025 the Company was in compliance with the covenants under its debt agreements.
Fifth Amendment to the Credit Agreement. On May 6, 2024, the Company amended and extended its existing Credit Agreement (the "Fifth Amendment") which resulted in a new $
Revolving Loan. As of June 30, 2025, $
Senior Unsecured Notes. In October 2020, the Company issued $
Fair Value. The Company's debt is classified as Level 2 in the fair value hierarchy, and the fair value is measured based on comparable trading prices, ratings, sectors, coupons and maturities of similar instruments.
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||
Fair value |
$ |
|
|
$ |
|
||
Carrying value |
|
|
|
|
|
||
9
Cars.com Inc.
Notes to the Consolidated Financial Statements (continued)
(Unaudited)
NOTE 6. Commitments and Contingencies
From time to time, the Company and its subsidiaries may become involved in actions, claims, suits or other legal or administrative proceedings arising in the ordinary course of business. The Company records a liability when it believes that it is both probable that a loss will be incurred and the amount of loss can be reasonably estimated. The Company evaluates, at least quarterly, developments in its commitments and contingencies that could affect the amount of liability that has been previously accrued and makes adjustments as appropriate. Significant judgment is required to determine both the probability and the estimated amount of liability, if any. It is not possible to predict the outcome of these proceedings or the range of reasonably possible loss. The Company does not expect, based on circumstances currently known, that the ultimate resolution of any of these proceedings will have, either individually or in the aggregate, a material adverse effect on the Company's consolidated financial position, results of operations or cash flows.
NOTE 7. Stockholders' Equity
On February 27, 2025, the Company announced that its Board of Directors had authorized a
NOTE 8. Stock-Based Compensation
Omnibus Plan. In May 2017, the Company’s Board of Directors approved the Cars.com Inc. Omnibus Incentive Compensation Plan (the "Omnibus Plan"), which provides for the granting of new shares for stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and other stock-based and cash-based awards. On June 4, 2025, the Company held its 2025 Annual Meeting of Stockholders (the "Annual Meeting"). At the Annual Meeting, the Company's stockholders approved amendments to the Omnibus Plan to increase the maximum number of shares of the Company's common stock, par value $
Restricted Share Units ("RSUs"). RSUs represent the right to receive unrestricted shares of the Company’s common stock at the time of vesting, subject to any restrictions as specified in the individual holder’s award agreement. RSUs are subject to graded vesting, generally ranging between
|
Number |
|
|
Weighted-Average |
|
||
Outstanding as of December 31, 2024 |
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
||
Vested and delivered |
|
( |
) |
|
|
|
|
Forfeited |
|
( |
) |
|
|
|
|
Outstanding as of June 30, 2025 (1) |
|
|
|
$ |
|
||
Performance Share Units ("PSUs"). PSUs represent the right to receive unrestricted shares of the Company’s common stock at the time of vesting. The fair value of the PSUs is equal to the Company’s common stock price on the date of grant. Expense related to PSUs is recognized when the performance conditions are probable of being achieved. The percentage of PSUs that shall vest will range from
10
Cars.com Inc.
Notes to the Consolidated Financial Statements (continued)
(Unaudited)
adjusted net income per share targets and total shareholder return. These PSUs are subject to cliff vesting after the end of the respective performance period.
|
Number |
|
|
Weighted-Average |
|
||
Outstanding as of December 31, 2024 |
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
||
Vested and delivered |
|
( |
) |
|
|
|
|
Forfeited |
|
( |
) |
|
|
|
|
Outstanding as of June 30, 2025 |
|
|
|
$ |
|
||
NOTE 9. Earnings Per Share
Basic earnings per share is calculated by dividing Net income by the weighted-average number of shares of the Company's common stock outstanding. Diluted earnings per share is similarly calculated, except that the calculation includes the dilutive effect of the assumed issuance of shares under stock-based compensation plans, unless the inclusion of such shares would have an anti-dilutive impact. As part of the AccuTrade acquisition, the Company may have had to pay up to $
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Net income |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Basic weighted-average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
||||
Effect of dilutive stock-based compensation awards (1) |
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted weighted-average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings per share, basic |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Earnings per share, diluted |
|
|
|
|
|
|
|
|
|
|
|
||||
NOTE 10. Income Taxes
Effective Tax Rate. The effective income tax rate for the six months ended June 30, 2025, expressed by calculating the Income tax expense as a percentage of Income before income taxes, differed from the statutory federal income tax rate of
NOTE 11. Segment Information
Operating segments are components of an entity for which separate financial information is available and evaluated regularly by the chief operating decision maker (the "CODM") in deciding how to allocate resources and in assessing performance. The Company has determined that it has a single operating and reportable segment. The Company’s CODM is the Cars Commerce Chief Executive Officer. The CODM makes resource allocation decisions to maximize the Company's consolidated financial results. Significant expenses reviewed by the CODM are primarily limited to those that are presented in the Consolidated Statements of Income. The significant expense categories disclosed in the December 31, 2024 Consolidated Financial Statements, except for those also presented in the Consolidated Statements of Income, are no longer regularly provided to or utilized by the CODM. Asset information is not provided to the CODM.
11
Note About Forward-Looking Statements
This report 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, condition of the global supply chain, fluctuating fuel prices, interest rate environment, inflationary pressures and other factors we think are appropriate. Such forward-looking statements, while considered reasonable by the Company and its management, are inherently uncertain. While the Company 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 place undue reliance 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 only view such comparisons as historical data. 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 report. Factors that might cause such differences include, but are not limited to,:
12
13
For a detailed discussion of these 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, 2024, as filed with the SEC on February 27, 2025 and our other filings filed with the SEC. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking statement. The forward-looking statements in this report are intended to be subject to the safe harbor protection provided by the federal securities laws.
14
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our business, financial condition, results of operations and quantitative and qualitative disclosures should be read in conjunction with our unaudited interim consolidated financial statements ("Consolidated Financial Statements") and related notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion and analysis also contains forward-looking statements and should be read in conjunction with the disclosures and information contained in "Note About Forward-Looking Statements" in this Quarterly Report on Form 10-Q. The financial information discussed below and included elsewhere in this Quarterly Report on Form 10-Q may not necessarily reflect what our financial condition, results of operations and cash flows may be in the future.
References in this discussion and analysis to "we," "us," "our," "Cars Commerce" and similar terms refer to Cars.com Inc. and its subsidiaries, collectively, unless the context indicates otherwise.
Business Overview
Cars Commerce is an audience-driven technology company empowering the automotive industry. We simplify everything about car buying and selling with powerful products powered by data and machine learning that span pretail, retail and post-sale activities – enabling more efficient and profitable retail operations. The Cars Commerce platform is organized around five industry-leading capabilities: our flagship automotive marketplace and dealer reputation site Cars.com, award-winning website and digital retail technology and marketing services from Dealer Inspire and D2C Media, essential trade-in and appraisal technology from AccuTrade, a reputation-based dealer-to-dealer wholesale auction from DealerClub and exclusive in-market media solutions from the Cars Commerce Media Network.
Overview of Results
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
(in thousands) |
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Revenue |
$ |
178,739 |
|
|
$ |
178,894 |
|
|
$ |
357,763 |
|
|
$ |
359,070 |
|
Net income |
|
7,009 |
|
|
|
11,381 |
|
|
|
4,996 |
|
|
|
12,165 |
|
Key Operating Metrics
We regularly review a number of key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make operating and strategic decisions. Key Operating Metrics are as follows (Traffic and Average Monthly Unique Visitors in thousands):
|
Three Months Ended June 30, |
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
|
||||||||||||
|
2025 |
|
|
2024 |
|
|
% Change |
|
|
2025 |
|
|
2024 |
|
|
% Change |
|
||||||
Traffic |
|
162,036 |
|
|
|
158,117 |
|
|
|
2 |
% |
|
|
332,123 |
|
|
|
329,554 |
|
|
|
1 |
% |
Average Monthly Unique Visitors |
|
26,649 |
|
|
|
26,107 |
|
|
|
2 |
% |
|
|
27,848 |
|
|
|
27,220 |
|
|
|
2 |
% |
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
% Change |
|
|
March 31, 2025 |
|
|
% Change |
|
|||||
Dealer Customers |
|
19,412 |
|
|
|
19,390 |
|
|
|
0 |
% |
|
|
19,250 |
|
|
|
1 |
% |
Monthly Average Revenue Per Dealer |
$ |
2,435 |
|
|
$ |
2,474 |
|
|
|
(2 |
)% |
|
$ |
2,473 |
|
|
|
(2 |
)% |
Average Monthly Unique Visitors ("UVs") and Traffic. UVs and Traffic are fundamental to our business. They are indicative of our consumer reach and the level of engagement consumers have with our platform. Although our consumer engagement does not directly result in revenue, we believe our ability to reach in-market car shoppers is attractive to our dealers, OEMs and national customers and a primary reason they do business with us. We believe we have achieved audience scale as measured by UVs and Traffic. Traffic is driven by a combination of UVs visiting our properties and repeat visitation and engagement. We monetize impressions, clicks and other connections that result from traffic to our site via our products and services.
We define UVs in a given month as the number of distinct visitors that engage with our 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 our mobile apps on an individual device. If a visitor accesses more than one of our 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). We measure UVs and Traffic via RudderStack. These metrics do not include traffic to Dealer Inspire, D2C Media or DealerClub websites.
15
UVs increased 2% for each of the three and six months ended June 30, 2025, and Traffic increased 2% and 1% for the three and six months ended June 30, 2025, respectively, primarily driven by increased consumer demand in March and early April in anticipation of rising prices related to automotive tariffs and strategic shifts in our marketing mix.
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. Dealer Customer metrics do not include DealerClub.
Dealer Customers increased 1% from March 31, 2025 and also increased to a slightly lessor extent from June 30, 2024.
Monthly Average Revenue Per Dealer ("ARPD"). We believe that our ability to grow ARPD is an indicator of the value proposition of our platform. We define ARPD as Dealer revenue, excluding digital advertising services and DealerClub, during the period divided by the monthly average number of Dealer Customers during the same period.
For the three months ended June 30, 2025, ARPD decreased 2% compared to each of the three months ended June 30, 2024 and March 31, 2025, primarily due to changes in our customer mix.
Factors Affecting Our Performance. Our business is impacted by changes in the larger automotive ecosystem, including supply and demand for new and used vehicle inventory, global supply chain and information systems disruptions, semiconductor and raw material shortages, vehicle acquisition cost, vehicle retail prices, the rate of electric vehicle adoption, employee retention and changes related to automotive advertising, among other macroeconomic factors including the political environment, inflationary pressures, tariffs and prevailing interest rates. Changes in vehicle sales volumes in the United States and Canada also influence OEMs’ and dealerships’ willingness to increase investments in technology solutions and automotive marketplaces like Cars.com and could impact our pricing strategies and/or revenue mix.
Our long-term success will depend in part on our ability to continue to execute our platform strategy including continuing to create an engaged in-market audience, growing our dealer customers, expanding our relationship with dealers through greater adoption of our platform, unlocking the cross-sell, transforming our OEM relationships and creating platform advantages. We believe our core strategic strengths, including our powerful family of brands, growing high-quality audience and suite of digital solutions for advertisers, including artificial intelligence, will assist us as we navigate a rapidly changing automotive environment. Additionally, we are focused on equipping our customers with digital solutions to enable them to compete in an environment in which an increasing number of car-buying customers are shopping online. These solutions include online chat, vehicle financing, appraisal and valuation and instant guaranteed offer capabilities. The foundation of our continued success is the value we deliver to customers, and we believe that our large audience of in-market car shoppers and innovative solutions deliver significant value to our customers.
16
Results of Operations
Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024
|
Three Months Ended June 30, |
|
|
|
|
|
|
|
|||||||
(In thousands, except percentages) |
2025 |
|
|
2024 |
|
|
$ Change |
|
|
% Change |
|
||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
||||
Dealer |
$ |
158,477 |
|
|
$ |
159,843 |
|
|
$ |
(1,366 |
) |
|
|
(1 |
)% |
OEM and National |
|
16,637 |
|
|
|
15,828 |
|
|
|
809 |
|
|
|
5 |
% |
Other |
|
3,625 |
|
|
|
3,223 |
|
|
|
402 |
|
|
|
12 |
% |
Total revenue |
|
178,739 |
|
|
|
178,894 |
|
|
|
(155 |
) |
|
|
(0 |
)% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of revenue and operations |
|
30,547 |
|
|
|
31,030 |
|
|
|
(483 |
) |
|
|
(2 |
)% |
Product and technology |
|
28,634 |
|
|
|
27,583 |
|
|
|
1,051 |
|
|
|
4 |
% |
Marketing and sales |
|
57,757 |
|
|
|
60,213 |
|
|
|
(2,456 |
) |
|
|
(4 |
)% |
General and administrative |
|
21,682 |
|
|
|
22,980 |
|
|
|
(1,298 |
) |
|
|
(6 |
)% |
Depreciation and amortization |
|
24,873 |
|
|
|
27,571 |
|
|
|
(2,698 |
) |
|
|
(10 |
)% |
Total operating expenses |
|
163,493 |
|
|
|
169,377 |
|
|
|
(5,884 |
) |
|
|
(3 |
)% |
Operating income |
|
15,246 |
|
|
|
9,517 |
|
|
|
5,729 |
|
|
|
60 |
% |
Nonoperating expense: |
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, net |
|
(7,644 |
) |
|
|
(8,109 |
) |
|
|
465 |
|
|
|
(6 |
)% |
Other income, net |
|
2,366 |
|
|
|
14,990 |
|
|
|
(12,624 |
) |
|
|
(84 |
)% |
Total nonoperating (expense) income, net |
|
(5,278 |
) |
|
|
6,881 |
|
|
|
(12,159 |
) |
|
***% |
|
|
Income before income taxes |
|
9,968 |
|
|
|
16,398 |
|
|
|
(6,430 |
) |
|
|
(39 |
)% |
Income tax expense |
|
2,959 |
|
|
|
5,017 |
|
|
|
(2,058 |
) |
|
|
(41 |
)% |
Net income |
$ |
7,009 |
|
|
$ |
11,381 |
|
|
$ |
(4,372 |
) |
|
|
(38 |
)% |
*** Not meaningful
Dealer revenue. Dealer revenue is typically subscription-oriented and consists of marketplace, digital experience, including website solutions, AccuTrade and media products sold to dealer customers. Dealer revenue is our largest revenue stream, representing 89% of total revenue for each of the three months ended June 30, 2025 and 2024. Dealer revenue decreased $1.4 million or 1% primarily due to marketplace, as a result of lower average dealer count during the second quarter of 2025 and changes in our customer mix, partially offset by continued growth in solutions.
OEM and National revenue. OEM and National revenue largely consists of Cars Commerce Media Network products, including display advertising and other solutions sold to OEMs, advertising agencies, automotive dealer associations and auto adjacent businesses, including insurance companies. OEM and National revenue represented 9% of total revenue for each of the three months ended June 30, 2025 and 2024. OEM and National revenue increased $0.8 million or 5%, primarily due to increased OEM spending to raise consumer awareness.
Other revenue. Other revenue primarily consists of revenue related to vehicle listing data sold to third parties and pay per lead products. Other revenue represented 2% of total revenue for each of the three months ended June 30, 2025 and 2024. Other revenue increased $0.4 million or 12%.
Cost of revenue and operations. Cost of revenue and operations expense primarily consists of costs related to processing dealer vehicle inventory, product fulfillment, pay per lead products and compensation costs for the product fulfillment and customer service teams. Cost of revenue and operations expense represented 17% of total revenue for each of the three months ended June 30, 2025 and 2024. Cost of revenue and operations decreased $0.5 million or 2%, and remained flat as a percentage of revenue. The change is primarily due to lower compensation expense, partially offset by higher third-party costs associated with certain products driven by product mix.
Product and technology. The product team creates and manages consumer and customer-facing innovation and consumer and customer experience. The technology team develops and supports our products, websites and mobile apps. Product and technology expense includes compensation costs, consulting and contractor costs, hardware and software maintenance, software licenses and other infrastructure costs. Product and technology expense represented 16% and 15% of total revenue for the three months ended June 30, 2025 and 2024, respectively. Product and technology expense increased $1.1 million or 4%, primarily driven by incremental costs related to the acquisition of the DealerClub Inc. ("DealerClub") business. For information related to the acquisition, see Note 3 (Business
17
Combinations) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.
Marketing and sales. Marketing and sales expense primarily consists of traffic and lead acquisition costs, performance and brand marketing, trade events, compensation costs and travel for the marketing, sales and sales support teams, as well as bad debt expense related to the allowance for doubtful accounts. Marketing and sales expense represented 32% and 34% of total revenue for the three months ended June 30, 2025 and 2024, respectively. Marketing and sales expense decreased $2.5 million or 4%, as a strong surge in tariff-driven consumer interest allowed us to reduce our spend.
General and administrative. General and administrative expense primarily consists of compensation costs for certain of the executive, finance, legal, human resources, facilities and other administrative employees. In addition, general and administrative expense includes the cost of office space, legal, accounting and other professional services, transaction-related costs, severance, transformation and other exit costs and costs related to the write-off of assets. General and administrative expense represented 12% and 13% of total revenue for the three months ended June 30, 2025 and 2024, respectively. General and administrative expense decreased $1.3 million or 6%, primarily due to lower costs associated with our amended headquarters office lease.
Depreciation and amortization. Depreciation and amortization expense decreased $2.7 million or 10%, primarily due to certain assets being fully depreciated and amortized as compared to the prior-year period, partially offset by accelerated depreciation associated with our amended headquarters office lease.
Interest expense, net. Interest expense, net decreased $0.5 million or 6%, primarily due to a reduction in total indebtedness compared to the prior-year period and lower interest rates. For information related to our debt, see Note 5 (Debt) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.
Other income, net. Other income, net changed primarily due to the change in the fair value of contingent consideration in the prior- year period associated with the AccuTrade and CreditIQ acquisitions. For more information related to contingent consideration, see "Liquidity and Capital Resources" in Part II, Item 7., "Management’s Discussion and Analysis of Financial Condition and Results of Operations", of our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the Securities and Exchange Commission (the "SEC") on February 27, 2025.
Income tax expense. The effective income tax rate differed from the statutory federal income tax rate of 21%, primarily due to the tax expense on stock-based compensation.
18
Results of Operations
Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024
|
Six Months Ended June 30, |
|
|
|
|
|
|
|
|||||||
(In thousands, except percentages) |
2025 |
|
|
2024 |
|
|
$ Change |
|
|
% Change |
|
||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
||||
Dealer |
$ |
317,621 |
|
|
$ |
321,658 |
|
|
$ |
(4,037 |
) |
|
|
(1 |
)% |
OEM and National |
|
32,916 |
|
|
|
31,135 |
|
|
|
1,781 |
|
|
|
6 |
% |
Other |
|
7,226 |
|
|
|
6,277 |
|
|
|
949 |
|
|
|
15 |
% |
Total revenue |
|
357,763 |
|
|
|
359,070 |
|
|
|
(1,307 |
) |
|
|
(0 |
)% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of revenue and operations |
|
61,486 |
|
|
|
60,992 |
|
|
|
494 |
|
|
|
1 |
% |
Product and technology |
|
57,112 |
|
|
|
55,668 |
|
|
|
1,444 |
|
|
|
3 |
% |
Marketing and sales |
|
117,982 |
|
|
|
119,376 |
|
|
|
(1,394 |
) |
|
|
(1 |
)% |
General and administrative |
|
47,566 |
|
|
|
45,837 |
|
|
|
1,729 |
|
|
|
4 |
% |
Depreciation and amortization |
|
51,912 |
|
|
|
54,936 |
|
|
|
(3,024 |
) |
|
|
(6 |
)% |
Total operating expenses |
|
336,058 |
|
|
|
336,809 |
|
|
|
(751 |
) |
|
|
(0 |
)% |
Operating income |
|
21,705 |
|
|
|
22,261 |
|
|
|
(556 |
) |
|
|
(2 |
)% |
Nonoperating expense: |
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, net |
|
(15,312 |
) |
|
|
(16,430 |
) |
|
|
1,118 |
|
|
|
(7 |
)% |
Other income, net |
|
2,342 |
|
|
|
11,387 |
|
|
|
(9,045 |
) |
|
|
(79 |
)% |
Total nonoperating expense, net |
|
(12,970 |
) |
|
|
(5,043 |
) |
|
|
(7,927 |
) |
|
***% |
|
|
Income before income taxes |
|
8,735 |
|
|
|
17,218 |
|
|
|
(8,483 |
) |
|
|
(49 |
)% |
Income tax expense |
|
3,739 |
|
|
|
5,053 |
|
|
|
(1,314 |
) |
|
|
(26 |
)% |
Net income |
$ |
4,996 |
|
|
$ |
12,165 |
|
|
$ |
(7,169 |
) |
|
|
(59 |
)% |
*** Not meaningful
Dealer revenue. Dealer revenue represented 89% and 90% of total revenue for the six months ended June 30, 2025 and 2024, respectively. Dealer revenue decreased $4.0 million or 1% primarily due to marketplace, as a result of lower average dealer count during the first half of 2025 and changes in our customer mix. Additionally, media revenue decreased slightly, which we believe is due to macroeconomic trends. These decreases were partially offset by continued growth in solutions.
OEM and National revenue. OEM and National revenue represented 9% of total revenue for each of the six months ended June 30, 2025 and 2024. OEM and National revenue increased $1.8 million or 6%, primarily due to increased OEM spending to raise consumer awareness and increased on-the-lot inventory levels earlier in the year.
Other revenue. Other revenue represented 2% and 1% of total revenue for the six months ended June 30, 2025 and 2024, respectively. Other revenue increased $0.9 million or 15%.
Cost of revenue and operations. Cost of revenue and operations expense represented 17% of total revenue for each of the six months ended June 30, 2025 and 2024. Cost of revenue and operations increased $0.5 million or 1%, primarily due to higher third-party costs associated with certain products driven by product mix, partially offset by lower compensation expense.
Product and technology. Product and technology expense represented 16% of total revenue for each of the six months ended June 30, 2025 and 2024. Product and technology expense increased $1.4 million or 3%, primarily due to incremental costs related to the acquisition of the DealerClub business and higher compensation, partially offset by lower third-party costs, including licenses.
Marketing and sales. Marketing and sales expense represented 33% of total revenue for each of the six months ended June 30, 2025 and 2024. Marketing and sales expense decreased $1.4 million or 1%, primarily due to changes in our marketing investment and mix, partially offset by higher compensation, including stock-based compensation.
General and administrative. General and administrative expense represented 13% of total revenue for each of the six months ended June 30, 2025 and 2024. General and administrative expense increased $1.7 million or 4%, primarily due to higher severance-related costs, partially offset by lower costs associated with our amended headquarters office lease.
19
Depreciation and amortization. Depreciation and amortization expense decreased $3.0 million or 6%, primarily due to certain assets being fully depreciated and amortized as compared to the prior-year period, partially offset by accelerated depreciation associated with our amended headquarters office lease.
Interest expense, net. Interest expense, net decreased $1.1 million or 7%, primarily due to a reduction in total indebtedness compared to the prior-year period and lower interest rates. For information related to our debt, see Note 5 (Debt) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.
Other income, net. Other income, net changed primarily due to the change in the fair value of contingent consideration in the prior- year period associated with the AccuTrade and CreditIQ acquisitions, partially offset by the impact of foreign exchange rates. For more information related to contingent consideration, see "Liquidity and Capital Resources" in Part II, Item 7., "Management’s Discussion and Analysis of Financial Condition and Results of Operations", of our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on February 27, 2025.
Income tax expense. The effective income tax rate differed from the statutory federal income tax rate of 21%, primarily due to the tax expense on stock-based compensation and nondeductible items.
20
Liquidity and Capital Resources
Overview. Our primary sources of liquidity are cash flows from operations, available cash reserves and borrowing capacity available under our credit facility. We believe our positive operating cash flow, along with our Revolving Loan, provide adequate liquidity to meet our business needs for the next 12 months and beyond, including those for investments, debt service, share repurchases, contingent consideration payments and strategic acquisitions. However, our ability to maintain adequate liquidity in the future is dependent upon a number of factors, including our revenue, our ability to contain costs, including capital expenditures, and to collect accounts receivable and various other macroeconomic factors, many of which are beyond our direct control.
We may also seek to raise funds through debt or equity financing in the future to fund operations, significant investments or acquisitions that are consistent with our strategy. If we need to access the capital markets, there can be no assurance that financing may be available on attractive terms, if at all. As of June 30, 2025, Cash and cash equivalents were $27.7 million and including our undrawn Revolving Loan, our total liquidity was $317.7 million.
Indebtedness. As of June 30, 2025, the outstanding aggregate principal amount of our indebtedness was $460.0 million, at an average interest rate of 6.4%, including $400.0 million of outstanding aggregate principal under the 6.375% Senior Unsecured Notes due in 2028 and $60.0 million of outstanding principal under the Revolving Loan which had an interest rate of 6.4%.
During the six months ended June 30, 2025, we borrowed $10.0 million and repaid $10.0 million on our Revolving Loan. As of June 30, 2025, $290.0 million was available to borrow under the Revolving Loan. Our borrowings are limited by our Senior Secured Net Leverage Ratio and Consolidated Interest Coverage Ratio, in addition to other factors. Calculated in accordance with our Credit Agreement, these ratios were 0.2x and 6.7x, respectively, as of June 30, 2025. For further information, see Note 5 (Debt) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.
Share Repurchase Program. On February 27, 2025, we announced that our Board of Directors had authorized a three-year share repurchase program to acquire up to $250.0 million of our common stock. The repurchase program may be suspended or discontinued at any time and does not obligate us to repurchase any specific amount or number of shares. We may repurchase shares from time to time in open market transactions or through privately negotiated transactions in accordance with applicable federal securities laws and other applicable legal requirements, and subject to our blackout periods. We intend to fund the share repurchase program principally with cash from operations. During the six months ended June 30, 2025, we repurchased and subsequently retired 3.7 million shares for $44.6 million at an average price paid per share of $12.17.
Earnouts.
For information related to the earnouts, see Note 3 (Business Combinations) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q and Note 3 (Business Combinations) in Part II, Item 8., "Financial Statements and Supplementary Data", of our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on February 27, 2025.
21
Cash Flows. Details of our cash flows are as follows (in thousands):
|
Six Months Ended June 30, |
|
|
|
|
||||||
|
2025 |
|
|
2024 |
|
|
Change |
|
|||
Net cash provided by (used in): |
|
|
|
|
|
|
|
|
|||
Operating activities |
$ |
55,683 |
|
|
$ |
68,722 |
|
|
$ |
(13,039 |
) |
Investing activities |
|
(29,124 |
) |
|
|
(12,493 |
) |
|
|
(16,631 |
) |
Financing activities |
|
(49,343 |
) |
|
|
(66,223 |
) |
|
|
16,880 |
|
Effect of exchange rate changes on Cash and cash equivalents |
|
(185 |
) |
|
|
(133 |
) |
|
|
(52 |
) |
Net change in Cash and cash equivalents |
$ |
(22,969 |
) |
|
$ |
(10,127 |
) |
|
$ |
(12,842 |
) |
Operating Activities. Cash provided by operating activities for the six months ended June 30, 2025 decreased due to Net income and the related adjustments on the Consolidated Statement of Cash Flows and also by changes in working capital compared to the six months ended June 30, 2024, which include an increase of $7.8 million of earnout payments related to the D2C acquisition. For further information, see the Consolidated Statements of Cash Flows included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.
Investing Activities. The increase in cash used in investing activities was primarily due to the impact of the DealerClub Acquisition, partially offset by the proceeds collected from the sale of the RepairPal equity investment in the current year.
Financing Activities. During the six months ended June 30, 2025, cash used in financing activities was primarily related to repurchases of common stock and tax payments made in connection with the vesting of certain equity awards. During the six months ended June 30, 2024, cash used in financing activities was primarily related to payments of contingent consideration, debt repayments, repurchases of common stock and tax payments made in connection with the vesting of certain equity awards. For information related to our debt, repurchases of common stock and contingent consideration, see Note 5 (Debt) and Note 7 (Stockholders' Equity) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q, and "Liquidity and Capital Resources" in Part II, Item 7., "Management’s Discussion and Analysis of Financial Condition and Results of Operations", of our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on February 27, 2025.
Commitments and Contingencies. For information related to commitments and contingencies, see Note 6 (Commitments and Contingencies) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.
Off-Balance Sheet Arrangements. We do not have any material off-balance sheet arrangements.
Critical Accounting Policies. For information related to critical accounting policies, see "Critical Accounting Policies and Estimates" in Part II, Item 7., "Management’s Discussion and Analysis of Financial Condition and Results of Operations", of our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on February 27, 2025 and see Note 1 (Description of Business and Summary of Significant Accounting Policies) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q. During the six months ended June 30, 2025, there have been no changes to our critical accounting policies.
Recent Accounting Standards. For information related to recent accounting pronouncements, see Note 1 (Description of Business and Summary of Significant Accounting Policies) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.
22
Item 3. Quantitative and Qualitative Disclosures about Market Risk
For quantitative and qualitative disclosures about market risk, see "Quantitative and Qualitative Disclosures About Market Risk," in Part II, Item 7A. of our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 27, 2025. Our exposures to market risk have not changed materially since December 31, 2024.
Item 4. Controls and Procedures
Disclosure Controls and Procedures. Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Management recognizes that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Changes in Internal Control Over Financial Reporting. During the period covered by this Quarterly Report on Form 10-Q, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).
23
PART II—OTHER INFORMATION
Item 1. Legal Proceedings
For information relating to legal proceedings, see Note 6 (Commitments and Contingencies) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.
Item 1A. Risk Factors
Our business and the ownership of our common stock are subject to a number of risks and uncertainties that could materially affect our business, financial condition, results of operations and future results, including those described in Part I, Item 1A., "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on February 27, 2025. There have been no material changes from the risk factors described in our Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Sales of Unregistered Securities by Issuer
None.
Purchases of Equity Securities by Issuer
Our stock repurchase activity for the three months ended June 30, 2025 is as follows:
Period |
Total Number of |
|
Average Price Paid per Share (1) |
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) |
|
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) (3) |
|
||||
April 1 through April 30, 2025 |
|
823,942 |
|
$ |
11.24 |
|
|
823,942 |
|
$ |
229,013 |
|
May 1 through May 31, 2025 |
|
730,494 |
|
|
10.69 |
|
|
730,494 |
|
|
221,201 |
|
June 1 through June 30, 2025 |
|
558,888 |
|
|
10.79 |
|
|
558,888 |
|
|
215,168 |
|
|
|
2,113,324 |
|
|
|
|
2,113,324 |
|
|
|
||
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Insider Adoption or Termination of Trading Arrangements
24
None of the Company’s directors or officers
25
Item 6. Exhibits
Exhibit Index
Exhibit Number |
|
Description |
3.1** |
|
Amended and Restated Certificate of Incorporation of Cars.com Inc. (incorporated by reference to Exhibit 3.1 of Cars.com Inc.’s Form 8-K filed on June 6, 2025, File No. 001-37869). |
3.2** |
|
Amended and Restated Bylaws of Cars.com Inc. (incorporated by reference to Exhibit 3.2 of Cars.com Inc.’s Form 8-K filed on October 23, 2018, File No. 001-37869). |
10.1** |
|
Cars.com Inc. Omnibus Incentive Compensation Plan (Amended and Restated Effective June 4, 2025) (incorporated by reference to Exhibit 99.1 of Cars.com Inc.’s Form S-8 filed on June 4, 2025, File No. 33-287762). |
31.1* |
|
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2* |
|
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1* |
|
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2* |
|
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document. |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
104 |
|
Cover page formatted as Inline XBRL and contained in Exhibit 101 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Filed herewith.
** Previously filed.
26
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
Cars.com Inc. |
||
|
|
|
|
|
Date: August 7, 2025 |
|
By: |
|
/s/ T. Alex Vetter |
|
|
|
|
T. Alex Vetter |
|
|
|
|
Chief Executive Officer |
|
|
|
|
|
Date: August 7, 2025 |
|
By: |
|
/s/ Sonia Jain |
|
|
|
|
Sonia Jain |
|
|
|
|
Chief Financial Officer |
27
Source:
