Cars.com reported nearly flat third-quarter revenue as growth in its dealer Marketplace offset weakness in other products. Profitability improved sharply: net income more than doubled, while lower operating costs helped lift adjusted EBITDA and its margin.
The company also expanded its product offerings for independent dealers, reported further adoption of its higher-tier subscription, and continued share repurchases. It said it is focusing on product innovation and operating efficiency as it pursues product-led growth.
Key details
- Revenue was $181.9 million, compared with $181.6 million a year earlier. Marketplace revenue grew 5%, while total revenue was essentially unchanged.
- Subscription-based dealer revenue rose 1% to $163.4 million, supported by greater Marketplace value and customer count, partly offset by declines in media and solutions products.
- OEM and National revenue fell 3% year over year to $15.7 million, but increased 15% from the second quarter as OEM advertising recovered.
- Net income rose to $16.3 million from $7.7 million. Diluted earnings per share increased to $0.30 from $0.12. Adjusted net income was $32.3 million, up 6%, and adjusted diluted earnings per share rose 21% to $0.58.
- Adjusted EBITDA increased 2% to $55.8 million, with a 30.7% margin. That margin was 120 basis points above the company’s guidance range.
- Operating expenses declined 7% to $153.0 million. Adjusted operating expenses fell 5% to $142.4 million. Cars.com attributed the improvement to cost management and efficiencies in general and administrative and sales and marketing costs, alongside lower depreciation and amortization.
- Marketplace dealer customers numbered 19,251, down 1% from a year earlier. The count excludes Marketplace Starter subscribers, which are non-paid subscriptions.
- Average monthly revenue per dealer was $2,532, up 3% year over year and the second-highest quarterly level reported. Premium+ reached 12% adoption during the quarter.
- The new Marketplace Starter self-service subscription was taken up by nearly 400 independent dealers. The offering adds listings on Cars.com and new capabilities for local dealers.
- Average monthly unique visitors were 24.7 million, down 3% year over year, while visits totaled 150.2 million, down 4%. The company said its audience-acquisition strategy delivered year-over-year growth in lead volume despite lower traffic.
- Cars.com said it was the most-cited automotive marketplace across ChatGPT, Google AI Overviews and Google AI Mode in September, based on aggregated citations among a group of major automotive sites. Its AI-powered shopping assistant, Carson, surpassed 1 million monthly users, nearly doubling from a year earlier.
- The company appointed Mausam Bhatt as chief product officer, citing his experience building and scaling digital businesses and marketplaces.
- Cars.com repurchased 1.4 million shares for $16 million during the quarter. Year-to-date repurchases reached 7.6 million shares for $74 million, putting the company on pace for its stated $90 million target for 2026.
Plain-English implications
Marketplace growth and higher-tier subscriptions supported dealer revenue, while the company’s lower expenses helped earnings rise substantially despite little change in overall revenue. The Starter offering extends the Marketplace to independent dealers through a non-paid subscription, while the reported dealer-customer count excludes those users. The quarter’s repurchases represent a continued use of capital to buy back shares.