Cars.com — Second Quarter 2026 Earnings Summary

Financial Performance

• Revenue grew 1% year-over-year to $179.9 million, meeting guidance expectations.
• Net income increased 103% year-over-year to $14.3 million ($0.25 per diluted share), compared to $7.0 million ($0.11 per diluted share) in the prior year period.
• Adjusted net income rose 9% year-over-year to $28.7 million ($0.51 per diluted share).
• Adjusted EBITDA grew 4% year-over-year to $53.0 million, with a margin of 29.4%, exceeding the guidance range of 28% to 29%.
• Total operating expenses decreased 7% year-over-year to $152.1 million, driven by lower depreciation and amortization and cost reduction efficiencies.
• Adjusted operating expenses were $144.3 million, down 6% year-over-year.
• Net cash provided by operating activities for the six months ended June 30, 2026, was $55.6 million.
• Free cash flow for the six-month period totaled $43.5 million, up from $41.8 million in the prior year.
• Total debt outstanding was $450.0 million as of June 30, 2026.
• Total liquidity was $333.3 million, consisting of $33.3 million in cash and cash equivalents and a $300.0 million revolver capacity.

Guidance and Future Outlook

• Third Quarter 2026 revenue is expected to be flat to up 2% year-over-year, driven by Dealer revenue growth and Marketplace improvements, while OEM and National revenue faces ongoing pressure.
• Third Quarter 2026 Adjusted EBITDA margin is expected to be between 28.5% and 29.5%.
• Full Year 2026 revenue guidance is reaffirmed as flat to up 2% year-over-year.
• Full Year 2026 Adjusted EBITDA margin guidance is reaffirmed as between 29.0% and 30.0%.

Business Segments and Product Lines

• Marketplace revenue grew over 7% year-over-year, representing the fastest quarterly growth rate since 2021.
• Subscription-based Dealer revenue was $163.3 million, up 3% year-over-year, driven by improved Marketplace value delivery and dealer count, partially offset by a decline in media products.
• OEM and National revenue was $13.6 million, down 18% year-over-year, consistent with expected declines in OEM advertising investment.
• Dealer Verified Listings, a new product feature adding inspection and pricing insights, was launched on the Marketplace.
• Monthly Average Revenue Per Dealer (ARPD) increased 3% year-over-year to $2,500.
• Marketplace dealer customers grew 2% year-over-year, marking four consecutive quarters of subscriber growth.

Market and Competitive Landscape

• Average Monthly Unique Visitors declined 14% year-over-year to 22.8 million, and Traffic (Visits) declined 12% year-over-year to 143.0 million, reflecting a strategic shift toward value delivery.
• Total Dealer Customers declined slightly year-over-year to 19,343, reflecting lower Solutions adoption partially offset by Marketplace strength.
• The strategic shift prioritized value delivery over traffic volume, resulting in year-to-date growth in lead volume.

Risks and Challenges

• OEM and National revenue faces ongoing pressure due to declines in OEM advertising investment.
• Solutions adoption has declined, contributing to a slight year-over-year decrease in total dealer count.
• Forward-looking statements are subject to risks and uncertainties, including market trends, strategic execution, and economic factors that could cause actual results to differ materially from expectations.

Management Commentary and Tone

• CEO Tobias Hartmann stated the company delivered expected revenue and profitability growth, driven by a Marketplace-focused strategy that achieved the highest Marketplace revenue growth since 2021.
• Hartmann noted that new product launches and precise audience targeting are encouraging signals for sustainable long-term growth.
• CFO Sonia Jain highlighted strong Marketplace growth, improved operating leverage, and Adjusted EBITDA margin outperformance as anchors for the quarter.
• Jain confirmed the company is pacing comfortably toward its $90 million share repurchase target for 2026.

Other Key Points

• The company repurchased 3.7 million shares for $37 million in the second quarter.
• Year-to-date share repurchases totaled 6.2 million shares for $57 million, on pace to meet the 2026 target of $90 million.
• Shares repurchased and retired year-to-date represent over 10% of the Company's common shares outstanding as of the prior year end.
• Approximately $116.6 million remains available under the share repurchase authorization, which expires in February 2028.