Cars.com Inc.

Good morning and welcome to the CARS second quarter 2021 earnings conference call. This call is being recorded and a live webcast can be found at investor.cars.com. A replay of the webcast will be available until August 19th. A copy of the accompanying slides can also be found on the company's investor relations website. I would now like to turn the call over to Robin Moore Randolph, Director of Investor Relations.

Good morning, everyone, and thank you for joining us. It's my pleasure to welcome you to the CARS second quarter 2021 conference call. With me this morning are Alex Benner, CEO, and Sonia James, CFO. Alex will start by discussing our highlights from the quarter, then Sonia will discuss our financial results in greater detail along with our third quarter expectations. We'll finish the call with Q&A. Before I turn the call over to Alex, I'd like to draw your attention to our forward-looking statement and the description and definition of non-GAAP financial measures, which can be found in our presentation. We will be discussing certain non-GAAP financial measures today, including adjusted EBITDA, adjusted EBITDA margin, and pre-cash flow. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measure can be found in the financial tables included with our earnings press release and in the appendix of the presentation. For more information, please refer to the risk factors included in our SEC filing, including those in our annual, quarterly, and current reports, which are available on the new investor section of our website. where you'll find updated content with a refreshed interface that's more engaging. We assume no obligation to update any forward-looking statements or information as of the respective date. Now, I'll turn the call over to Alex.

Thank you, Robin, and welcome to our second quarter 2021 earnings call. Let me start by saying how pleased I am with our continued momentum. We delivered another quarter of strong results and profitable growth through our focus on value delivery, innovation, and expansion of our digital solution. Our steady execution resulted in strong year-over-year revenue growth underpinned by increased dealer customers, elevated ARPD, and double-digit traffic growth. The results are a testament to the value we bring to the industry and the dedication of our team. Dealers are increasingly investing in our digital solution as consumers continue to embrace online car shopping. This accelerated shift towards a digital-first environment plays to our core strength and value-driving digital solution. We grew dealer customers for the fourth consecutive quarter and ended with 18,845 dealer customers. As expected, our new sales cycle was slower. However, even in the current inventory-constrained environment, dealers know that their cars still need to be found. Cars.com is the perfect platform for matching buyers and sellers, and the proof is in our record retention rates, which are continuing into Q3. Together, growth in dealer count and ARPD translated into yet another consecutive quarter of revenue growth. Our focused execution resulted in revenue and adjusted EBITDA coming in ahead of our expectations. Core to our success is the Cars.com market-leading brand. We provide customers with reliable access to a highly qualified, pure in-market audience. Importantly, the majority of our audience comes to us organically. It's a quality audience that can't be easily replicated or acquired through paid marketing tactics. And our traffic continues to scale towards market leadership. We are the fastest-growing marketplace in the category and and drive high-value traffic to thousands of dealers, including digital dealers, who rely on cars.com for sourcing sales. Just as our marketplace is important to local and digital dealers, it is also vitally important to the consumer purchase journey. Approximately 90% of car shoppers consider third-party marketplaces to be the most useful site during their car search. enabling them to shop across makes, models, read reviews, and research one of life's biggest purchases. Yet the automotive industry spends more than $5 billion on far less efficient paid search. In fact, an independent study exposing the inefficiencies of Google SEM was recently published by Brian Pasch, a leading automotive industry marketing consultant and dealer influencer. He found that automotive marketplaces deliver a lower cost per sale compared to Google SEM, which costs five to ten times more than many dealers realize to generate sales. Brian said, when comparing engagement from Cars.com referral traffic to Google SEM, Cars.com shoppers are three times more engaged and twice as likely to convert into a sale. there is a massive opportunity for dealers in our industry to shift some of that inefficient SEM spend towards more information-rich, third-party marketplaces who offer an audience with higher purchase intent. This is no surprise to us. Our unique ability to efficiently drive high-quality in-market traffic across both new and new star segments resulted in strong year-over-year audience growth. We generate traffic far more efficiently than our competitors. Most of our traffic is owned and not rented, meaning over 70% comes to us organically. SEO traffic was particularly strong this quarter and was up 6% year over year. Our organic strength is attributed to our strong brand, our number one rated mobile app, the quality of our consumer experience, and our industry-leading editorial content, which is an important differentiator for us. Editorial content is also an efficient way to engage with consumers earlier in their car shopping journey. A quarter of consumers who reach our website via our editorial content immediately move deeper into our marketplace and begin their car search. In June, we strengthened our catalog of content with the release of our 2021 American-Made Index, which highlights the most American-made vehicles. This content resonates with shoppers, sellers, and our OEM partners, who frequently highlight and count their placement in our index. Our annual AMI campaign is always well-received, and this year it again delivered more than 500 media stories that promote the Cars.com content and brand. Our pure in-market audience supports sustainable dealer value and customer growth. And for dealers, we are the most efficient solution. Dealer customers advertise their specific inventory on their lots, and we connect them with customers seeking an exact match. All other advertising models drive traffic broadly, but don't match supply with demand. And we now have grown our dealer customers for four consecutive quarters, reaching 18,845 a quarter end. This represents an increase of 812 dealers year over year and a 22-dealer increase over Q1. ARPD also grew for the fourth consecutive quarter. Adjusting for last year's COVID-related invoice credits, growth in ARPD was largely driven by fuel and our website solutions. Fuel allows dealers to reach our in-market audience with a range of messages across streaming video platforms. In fact, during the quarter, many dealers began to run vehicle acquisition campaigns to strengthen their ability to buy cars directly from the public. Fuel revenue grew double digits sequentially, and this revenue is generated by leveraging our existing audience, making it highly accretive to the bottom line. Fuel continues to gain traction across our dealer network, if they realize the power of our pure in-market audience. Dealers are also adapting our innovative digital solutions to have more touch points with consumers along their car buying journey. By quarter end, we powered a total of 5,000 dealer websites, and have become the leading provider of new entries in GM's dealer choice programs. We expect continued growth in dealer-inspired as we deliver on other business in the pipeline, which now includes the launch of four direct websites. As we expected, OEM and national performance for the quarter was muted by the continuing supply chain disruptions and chip shortages, but our results were better than initially expected. Nevertheless, as long as production remains limited, we'll maintain a conservative view for OEM and national advertising. One of the notable achievements of the quarter was the successful launch of the new cars.com cloud-based platform. Migrating the marketplace platform to cloud-based technology reduces our reliance on physical data centers and minimizes our environmental footprint. This platform also has a fresh and modern design with page load times up to 80% faster, enhancing our user experience and bolstering our leading SEO authorities. We've also optimized the speed at which we update dealer inventory. But most importantly, the new platform unlocks our ability to innovate faster, driving efficiency across our brands and more quickly bringing new industry-leading solutions to market. Turning to broader industry trends, retail sales for the first half of 2021 were the best on record in the past decade as vehicle demand continues to outpace supply. Dealers are reporting record profits on fewer sales as they leverage marketplaces and digital solutions to connect with shoppers more efficiently. Strong consumer demand and continued dealer profitability ensure that TARDIS is well positioned for the second half of the year. Now I'll turn the call over to Sonia to discuss in detail our financial results.