Cars.com Net Income Doubles as Marketplace Growth Offsets OEM Slump
The online automotive marketplace reported net income of $14.3 million for the second quarter.
Cars.com (CARS) reported net income of $14.3 million for the second quarter, a 103% increase from the $7.0 million recorded in the same period last year.
The automotive services provider saw a divergence in its primary revenue streams, where strong performance in its marketplace segment countered a deepening decline in OEM and national accounts. This shift occurred alongside a contraction in user traffic, suggesting a transition toward higher-value dealer monetization despite lower overall site volume.
Revenue for the quarter rose 1% year-over-year to $179.9 million, remaining essentially flat compared to the $180.2 million reported in the first quarter. Marketplace revenue grew over 7% year-over-year, the fastest quarterly growth rate for the segment since 2021. Conversely, OEM and National revenue fell 18% year-over-year to $13.6 million, an acceleration of the decline from the 12% drop seen in the prior quarter.
Profitability improved as the company reduced costs. Adjusted EBITDA margin expanded to 29.4%, up from 28.3% in the first quarter and 28.5% in the second quarter of 2024. Total operating expenses decreased 7% year-over-year to $152.1 million, due to April cost reduction activities and lower depreciation and amortization.
User engagement metrics trended lower during the period. Average monthly unique visitors fell 14% year-over-year and 12% sequentially to 22.8 million. Total visits declined 12% year-over-year and 10% sequentially to 143.0 million. Despite the traffic drop, monthly average revenue per dealer rose 1% sequentially to $2,500. Marketplace dealer customers grew 2% year-over-year, marking four consecutive quarters of subscriber growth even as the total dealer count dipped slightly to 19,343.
Cars.com expects third-quarter revenue to be flat to up 2% year-over-year, with an adjusted EBITDA margin between 28.5% and 29.5%. The company reaffirmed its full-year 2024 guidance, projecting revenue flat to up 2% year-over-year and an adjusted EBITDA margin between 29.0% and 30.0%.
The company repurchased 3.7 million shares for $37 million during the second quarter. This brings year-to-date repurchases to 6.2 million shares for $57 million, placing the company on pace to meet its $90 million target for 2024.