Cars.com Reports First Quarter 2026 Results
-
Revenue grew in line with guidance to
$180.2 million , up 1% year-over-year -
Net income increased to
$5.0 million compared to net loss of($2.0) million in the prior year -
Adjusted EBITDA grew to
$51.0 million , up 1% year-over-year; Adjusted EBITDA margin of 28.3% outperformed guidance of 26% to 27% -
Net cash provided by operating activities was
$39.8 million compared to$29.5 million in the prior year -
Share repurchases totaled 3.8 million shares for
$33 million throughApril 30, 2026 ; 2026 repurchase target has been increased to$90 million
"We delivered revenue growth in line with guidance in the first quarter on the back of continued Marketplace momentum and Adjusted EBITDA margin above the high end of guidance," said
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Financial Highlights |
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(in thousands, except per share data) |
Quarter Ended |
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|
2026 |
|
2025 |
|
Change % |
|
|
Revenue |
$ 180,223 |
|
$ 179,024 |
|
1 % |
|
Net income (loss) |
4,978 |
|
(2,013) |
|
NM |
|
Adjusted net income |
26,651 |
|
23,956 |
|
11 % |
|
Adjusted EBITDA |
51,020 |
|
50,721 |
|
1 % |
|
Net income (loss) per diluted share |
0.08 |
|
(0.03) |
|
NM |
|
Adjusted net income per diluted share |
0.45 |
|
0.37 |
|
22 % |
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Key Metrics and Operational Highlights |
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(in millions, except dealer data) |
Quarter Ended |
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|
|
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|
|
Change % Q/Q |
|
Change % |
|
|
Average Monthly Unique Visitors |
25.8 |
|
21.7 |
|
29.0 |
|
19 % |
|
(11 %) |
|
Traffic ("Visits") |
159.6 |
|
138.8 |
|
170.1 |
|
15 % |
|
(6 %) |
|
Monthly Average Revenue Per Dealer ("ARPD") |
$ 2,473 |
|
$ 2,472 |
|
$ 2,473 |
|
NM |
|
NM |
|
Dealer Customers |
19,390 |
|
19,544 |
|
19,250 |
|
(1 %) |
|
1 % |
|
|
|
NM = Not meaningful |
- Recent cost reductions and process and organizational improvements build a healthier foundation for future growth and are expected to yield
$25-30 million in recurring annualized savings in 2027. - New AI-powered features include conversational capabilities for the Cars.com Carson shopping assistant and model context protocol (MCP) integrations that embed Marketplace into agentic AI platforms.
- New Dealer App, available to all Marketplace customers, offers a broad range of on-the-go analytics to improve dealership efficiency across inventory, merchandising and leads.
Q1 2026 Results
Revenue for the first quarter was
Total operating expenses for the first quarter were
Net income for the first quarter was
Adjusted EBITDA for the first quarter was
Cash Flow and Balance Sheet
Net cash provided by operating activities for the first quarter was
Total debt outstanding was
Share Repurchase
The Company repurchased 3.8 million shares of common stock for
As of
"Our performance year-to-date demonstrates our ability to establish a foundation for revenue growth at increasing operating margins. We were pleased to outperform our Adjusted EBITDA guidance, improve free cash flow conversion, and increase capital return to shareholders via an enhanced 2026 share repurchase commitment," said
Outlook
Second Quarter 2026
- Revenue is expected to be flat to up 2% year-over-year, driven by continued Dealer revenue growth. OEM and National revenue is expected to remain under pressure, and guidance assumes that current advertising spending trends remain consistent for the quarter.
- Adjusted EBITDA margin is expected to be between 28.0% and 29.0%, reflecting operating efficiencies and a partial quarter of cost savings benefit from the cost reduction program undertaken in April.
Full Year 2026
The Company reaffirms its full year 2026 guidance:
- Revenue is expected to be flat to up 2% year-over-year
- Adjusted EBITDA margin is expected to be between 29.0% to 30.0%
Q1 2026 Earnings Call
As previously announced, management will hold a conference call and webcast today at
About Cars Commerce
Non-GAAP Financial Measures
This earnings release discusses Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net (loss) income, Free Cash Flow and Adjusted Operating Expenses. These financial measures are not prepared in accordance with generally accepted accounting principles in
While a reconciliation of non-GAAP measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to, as applicable, the timing, amount, valuation and number of future employee equity awards and the uncertainty relating to the timing, frequency, and effect of acquisitions and the significance of the resulting transaction-related expenses, the Company has provided a reconciliation of non-GAAP financial measures to their most directly comparable financial measure prepared in accordance with GAAP in this earnings release, see "Non-GAAP Reconciliations" below.
Other companies may define or calculate these measures differently, limiting their usefulness as comparative measures. Because of these limitations, non-GAAP financial measures should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP. Definitions of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP financial measures are presented in the tables below.
The Company defines Adjusted EBITDA as net income (loss) before (1) interest expense, net, (2) income tax (benefit) expense, (3) depreciation, (4) amortization of intangible assets, (5) stock-based compensation expense, (6) unrealized mark-to-market adjustments and cash transactions related to derivative instruments, (7) unrealized foreign currency exchange gains and losses, and (8) certain other items, such as transaction-related items, severance, transformation and other exit costs and write-off and impairments of goodwill, intangible assets and other long-lived assets.
Transaction-related items result from actual or potential transactions such as business combinations, mergers, acquisitions, dispositions, spin-offs, financing transactions, and other strategic transactions, including, without limitation, (1) transaction-related bonuses and (2) expenses for advisors and representatives such as investment bankers, consultants, attorneys and accounting firms. Transaction-related items may also include, without limitation, transition and integration costs such as retention bonuses and acquisition-related milestone payments to acquired employees, consulting, compensation and other incremental costs associated with integration projects, fair value changes to contingent considerations and amortization of deferred revenue related to the AccuTrade acquisition.
The Company defines Adjusted Net Income as GAAP net (loss) income excluding, net of their related tax effects: (1) amortization of intangible assets, (2) stock-based compensation expense, (3) unrealized mark-to-market adjustments and cash transactions related to derivative instruments, (4) unrealized foreign currency exchange gains and losses, and (5) certain other items, such as transaction-related costs, severance, transformation and other exit costs and write-off and impairments of goodwill, intangible assets and other long-lived assets.
The Company defines Free Cash Flow as net cash provided by operating activities less capital expenditures, including purchases of property and equipment and capitalization of internally developed technology.
The Company defines Adjusted Operating Expenses as total operating expenses adjusted to exclude stock-based compensation, write-off and impairments of goodwill, intangible assets, long-lived assets, severance, transformation and other exit costs and transaction-related items.
Key Metric Definitions
Average Monthly Unique Visitors ("UVs") and Traffic ("Visits"). The Company defines UVs in a given month as the number of distinct visitors that engage with its platform during that month. Visitors are identified upon first visit to an individual
Monthly Average Revenue Per Dealer ("ARPD"). The Company believes that its ability to grow ARPD is an indicator of the value proposition of its platform. The Company defines 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.
Dealer Customers. Dealer Customers represent dealerships using the Company's 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.
Forward-Looking Statements
This press release 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, and other factors we think are appropriate. Such forward-looking statements are based on estimates and assumptions that, while considered reasonable by Cars Commerce and its management based on their knowledge and understanding of the business and industry, are inherently uncertain. While Cars Commerce 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 rely 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 view such comparisons as historical data. Whether or not any such forward-looking statement is in fact achieved will depend on future events, some of which are beyond our control.
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 press release. For a detailed discussion of many of these and other 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
You should evaluate all forward-looking statements made in this press release in the context of these risks and uncertainties. The forward-looking statements contained in this press release are based only on information currently available to us and speak only as of the date of this press release. We undertake no obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, or changes in future operating results over time or otherwise. The forward-looking statements in this report are intended to be subject to the safe harbor protection provided by the federal securities laws.
Cars Commerce Investor Relations Contact:
kchen@carscommerce.inc
Cars Commerce Media Contact:
pr@cars.com
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Consolidated Statements of Income |
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(In thousands, except per share data) |
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(Unaudited) |
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|
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Three Months Ended |
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|
|
2026 |
|
2025 |
|
Revenue: |
|
|
|
|
Dealer |
$ 163,007 |
|
$ 159,144 |
|
OEM and National |
14,279 |
|
16,279 |
|
Other |
2,937 |
|
3,601 |
|
Total revenue |
180,223 |
|
179,024 |
|
Operating expenses: |
|
|
|
|
Cost of revenue and operations |
31,741 |
|
31,483 |
|
Product and technology |
31,495 |
|
30,617 |
|
Marketing and sales |
61,818 |
|
62,540 |
|
General and administrative |
21,818 |
|
20,885 |
|
Depreciation and amortization |
16,718 |
|
27,039 |
|
Total operating expenses |
163,590 |
|
172,564 |
|
Operating income |
16,633 |
|
6,460 |
|
Nonoperating expenses: |
|
|
|
|
Interest expense, net |
(7,231) |
|
(7,668) |
|
Other expense, net |
(686) |
|
(25) |
|
Total nonoperating expense, net |
(7,917) |
|
(7,693) |
|
Income (loss) before income taxes |
8,716 |
|
(1,233) |
|
Income tax expense |
3,738 |
|
780 |
|
Net income (loss) |
$ 4,978 |
|
$ (2,013) |
|
Weighted-average common shares outstanding: |
|
|
|
|
Basic |
58,928 |
|
64,467 |
|
Diluted |
59,594 |
|
64,467 |
|
Net income (loss) per share: |
|
|
|
|
Basic |
$ 0.08 |
|
$ (0.03) |
|
Diluted |
0.08 |
|
(0.03) |
|
|
|||
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Consolidated Balance Sheets |
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(In thousands, except per share data) |
|||
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|
|
|
|
|
|
|
|
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|
|
(unaudited) |
|
|
|
Assets: |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
$ 64,598 |
|
$ 56,236 |
|
Accounts receivable, net |
135,030 |
|
131,945 |
|
Prepaid expenses |
14,181 |
|
15,491 |
|
Other current assets |
4,221 |
|
7,920 |
|
Total current assets |
218,030 |
|
211,592 |
|
Property and equipment, net |
35,521 |
|
35,223 |
|
|
166,620 |
|
167,207 |
|
Intangible assets, net |
516,131 |
|
527,082 |
|
Deferred tax assets, net |
85,499 |
|
88,594 |
|
Investments and other assets, net |
31,612 |
|
32,720 |
|
Total assets |
$ 1,053,413 |
|
$ 1,062,418 |
|
Liabilities and stockholders' equity: |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
$ 29,307 |
|
$ 27,749 |
|
Accrued compensation |
33,921 |
|
38,074 |
|
Other accrued liabilities |
53,319 |
|
47,564 |
|
Total current liabilities |
116,547 |
|
113,387 |
|
Noncurrent liabilities: |
|
|
|
|
Long-term debt, net |
451,819 |
|
451,516 |
|
Deferred tax liabilities, net |
6,053 |
|
6,241 |
|
Other noncurrent liabilities |
18,246 |
|
18,744 |
|
Total noncurrent liabilities |
476,118 |
|
476,501 |
|
Total liabilities |
592,665 |
|
589,888 |
|
Commitments and contingencies |
|
|
|
|
Stockholders' equity: |
|
|
|
|
Preferred Stock at par, |
— |
|
— |
|
Common Stock at par, |
572 |
|
586 |
|
Additional paid-in capital |
1,397,696 |
|
1,413,994 |
|
Accumulated deficit |
(936,516) |
|
(941,494) |
|
Accumulated other comprehensive loss |
(1,004) |
|
(556) |
|
Total stockholders' equity |
460,748 |
|
472,530 |
|
Total liabilities and stockholders' equity |
$ 1,053,413 |
|
$ 1,062,418 |
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Consolidated Statements of Cash Flows |
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(In thousands) |
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(Unaudited) |
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|
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Three Months Ended |
||
|
|
2026 |
|
2025 |
|
Cash flows from operating activities: |
|
|
|
|
Net income (loss) |
$ 4,978 |
|
$ (2,013) |
|
Adjustments to reconcile Net income to Net cash provided by operating activities: |
|
|
|
|
Depreciation |
6,175 |
|
9,661 |
|
Amortization of intangible assets |
10,543 |
|
17,378 |
|
Stock-based compensation |
8,569 |
|
8,334 |
|
Deferred income taxes |
3,003 |
|
(343) |
|
Provision for doubtful accounts |
607 |
|
359 |
|
Amortization of debt issuance costs |
473 |
|
473 |
|
Unrealized loss (gain) on foreign currency denominated transactions |
637 |
|
(12) |
|
Other, net |
182 |
|
958 |
|
Changes in operating assets and liabilities, net of acquisitions: |
|
|
|
|
Accounts receivable |
(3,845) |
|
2,410 |
|
Prepaid expenses and other assets |
5,739 |
|
970 |
|
Accounts payable |
1,546 |
|
(4,696) |
|
Accrued compensation |
(4,458) |
|
(8,420) |
|
Other liabilities |
5,659 |
|
4,396 |
|
Net cash provided by operating activities |
39,808 |
|
29,455 |
|
Cash flows from investing activities: |
|
|
|
|
Payments for acquisitions, net of cash acquired |
— |
|
(24,422) |
|
Capitalization of internally developed technology |
(6,000) |
|
(4,984) |
|
Purchase of property and equipment |
(262) |
|
(811) |
|
Proceeds from sale of equity investment |
— |
|
9,481 |
|
Net cash used in investing activities |
(6,262) |
|
(20,736) |
|
Cash flows from financing activities: |
|
|
|
|
Proceeds from Revolving Loan borrowings |
— |
|
10,000 |
|
Payments of Revolving Loan borrowings and long-term debt |
— |
|
(10,000) |
|
Payments for stock-based compensation plans, net |
(4,542) |
|
(5,849) |
|
Repurchases of common stock |
(20,452) |
|
(21,538) |
|
Net cash used in financing activities |
(24,994) |
|
(27,387) |
|
Effect of exchange rate changes on Cash and cash equivalents |
(190) |
|
(570) |
|
Net increase (decrease) in Cash and cash equivalents |
8,362 |
|
(19,238) |
|
Cash and cash equivalents at beginning of period |
56,236 |
|
50,673 |
|
Cash and cash equivalents at end of period |
|
|
|
|
Supplemental cash flow information: |
|
|
|
|
Cash (received) paid for income taxes |
$ (3,504) |
|
$ 1,321 |
|
Cash paid for interest |
983 |
|
1,164 |
|
|
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Non-GAAP Reconciliations |
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(In thousands, except per share data) |
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(Unaudited) |
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|
|
|
|
|
|
|
|
|
Reconciliation of Net income to Adjusted EBITDA |
|||||||
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
||||
|
|
2026 |
|
2025 |
|
|
|
|
|
Net income (loss) |
$ 4,978 |
|
$ (2,013) |
|
|
|
|
|
Interest expense, net |
7,231 |
|
7,668 |
|
|
|
|
|
Income tax expense |
3,738 |
|
780 |
|
|
|
|
|
Depreciation and amortization |
16,718 |
|
27,039 |
|
|
|
|
|
Stock-based compensation, including related payroll tax expense |
8,815 |
|
8,703 |
|
|
|
|
|
Transaction-related and other one-time items |
8,854 |
|
8,519 |
|
|
|
|
|
Non-operating foreign exchange loss |
686 |
|
25 |
|
|
|
|
|
Adjusted EBITDA |
$ 51,020 |
|
$ 50,721 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net income (loss) to Adjusted Net income |
|||||||
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
||||
|
|
2026 |
|
2025 |
|
|
|
|
|
Net income (loss) |
$ 4,978 |
|
$ (2,013) |
|
|
|
|
|
Stock-based compensation, including related payroll tax expense |
8,815 |
|
8,703 |
|
|
|
|
|
Amortization of intangible assets |
10,543 |
|
17,378 |
|
|
|
|
|
Transaction-related items |
6 |
|
2,930 |
|
|
|
|
|
Non-operating foreign exchange loss |
686 |
|
25 |
|
|
|
|
|
Other one-time items |
8,848 |
|
5,589 |
|
|
|
|
|
Income tax impact of adjustments |
(7,225) |
|
(8,656) |
|
|
|
|
|
Adjusted net income |
$ 26,651 |
|
$ 23,956 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income per share, diluted |
$ 0.45 |
|
$ 0.37 |
|
|
|
|
|
Weighted-average common shares outstanding, diluted* |
59,594 |
|
65,137 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Weighted-average common shares outstanding, diluted, includes shares excluded from GAAP loss |
|
|
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|
|||
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net cash provided by operating activities to Free cash flow |
|||||||
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
||||
|
|
2026 |
|
2025 |
|
|
|
|
|
Net cash provided by operating activities |
$ 39,808 |
|
$ 29,455 |
|
|
|
|
|
Capitalization of internally developed technology |
(6,000) |
|
(4,984) |
|
|
|
|
|
Purchase of property and equipment |
(262) |
|
(811) |
|
|
|
|
|
Free cash flow |
$ 33,546 |
|
$ 23,660 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Operating expenses to Adjusted operating expenses for the Three Months Ended |
|||||||
|
|
|
|
|
|
|
|
|
|
|
As Reported |
|
Adjustments (1) |
|
Stock-Based Compensation |
|
As Adjusted |
|
Cost of revenue and operations |
$ 31,741 |
|
$ (931) |
|
$ (242) |
|
$ 30,568 |
|
Product and technology |
31,495 |
|
(3,351) |
|
(2,474) |
|
25,670 |
|
Marketing and sales |
61,818 |
|
(2,140) |
|
(2,303) |
|
57,375 |
|
General and administrative |
21,818 |
|
(2,432) |
|
(3,796) |
|
15,590 |
|
Depreciation and amortization |
16,718 |
|
— |
|
— |
|
16,718 |
|
Total operating expenses |
$ 163,590 |
|
$ (8,854) |
|
$ (8,815) |
|
$ 145,921 |
|
|
|
|
|
|
|
|
|
|
Total nonoperating expense, net |
$ (7,917) |
|
$ 686 |
|
$ — |
|
$ (7,231) |
|
|
|
|
|
|
|
|
|
|
(1) Includes severance, unrealized gains and losses on foreign currency denominated transactions, write-off of long-lived assets and transformation |
|||||||
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|
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|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Operating expenses to Adjusted operating expenses for the Three Months Ended |
|||||||
|
|
|
|
|
|
|
|
|
|
|
As Reported (1) |
|
Adjustments (1)(2) |
|
Stock-Based Compensation |
|
As Adjusted |
|
Cost of revenue and operations |
$ 31,483 |
|
$ (544) |
|
$ (178) |
|
$ 30,761 |
|
Product and technology |
30,617 |
|
(2,139) |
|
(2,513) |
|
25,965 |
|
Marketing and sales |
62,540 |
|
(2,356) |
|
(2,187) |
|
57,997 |
|
General and administrative |
20,885 |
|
(3,480) |
|
(3,825) |
|
13,580 |
|
Depreciation and amortization |
27,039 |
|
— |
|
— |
|
27,039 |
|
Total operating expenses |
$ 172,564 |
|
$ (8,519) |
|
$ (8,703) |
|
$ 155,342 |
|
|
|
|
|
|
|
|
|
|
Total nonoperating expense, net |
$ (7,693) |
|
$ 25 |
|
$ - |
|
$ (7,668) |
|
|
|
|
|
|
|
|
|
|
(1) Certain prior year balances have been reclassified to conform to the current year presentation. |
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(2) Includes severance, transaction-related items, write-off of long-lived assets, unrealized gains and losses on foreign currency denominated |
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SOURCE
