Cars.com Inc.

Good morning, and welcome to the CARS fourth quarter 2022 earnings conference call. This call is being recorded, and a live webcast and the accompanying slides can be found at investor.cars.com. An archive of the webcast will be available at CARS's Investor Relations website. I'd 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 fourth quarter 2022 conference call. With me this morning are Alex Fetter, CEO, and Sonya James, CFO. Alex will start by discussing the business highlights from the fourth quarter and full year. Then Sonya will discuss our financial results in greater detail, along with our 2023 outlook. 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 statements 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, adjusted operating expenses, and free cash flow. Reconciliations of these non-GAAP measures and the most directly comparable GAAP measure can be found in the financial tables included with our earnings press release and in the appendix of our presentation. Any forward-looking statements are subject to risks and uncertainties. For more information, please refer to the risk factors included in our SEC filings, including those in our most recently filed 10-K, which is available on the IR section of our website. We assume no obligation to update any forward-looking statements. Now I'll turn the call over to Alex.

Thank you, Robin, and welcome to our fourth quarter and full year 2022 earnings call. 2022 marked a strong year of growth for our business as we helped consumers, dealers, OEMs, and lenders in an environment that challenged many. Our strategic investments strengthened our platform advantage, most recently demonstrated with the successful launch of AccuTrade and the integration of Credit IQ. As a result, We saw accelerated revenue growth in each quarter of 2022, delivering $654 million of revenue for the full year, an increase of 5% year over year. Our adjusted EBITDA was also strong at $187 million, representing a 29% margin. Before diving into the details of our strong performance, I want to recognize that 2023 marks the significant milestone of CAR's 25th anniversary. Our success and durability are a testament to our incredibly talented team, highly recognized and trusted brand, innovative solutions, and our focus on empowering local automotive retail. The strength of this combination is what drives our platform strategy. We successfully expanded our business model beyond listings to drive vehicle sales and industry profitability through our category-leading audience and digital solutions. In 2016, the acquisition of Dealer Raider enhanced the user-generated content on our marketplace. And today, we have over 12 million consumer-submitted reviews, enabling local retailers to build their online reputation. Two years later, we expanded our technology and media solutions by acquiring Dealer Inspire, which was the catalyst for our solution strategy. We leveraged our deep OEM relationships to scale the business from 1,700 websites in 2018 to over 6,000 today. and more than doubled revenue during the same period. Also in 2018, we developed and launched Cars Social, which connects dealers and OEMs with in-market shoppers on social media platforms. Cars Social paves the way for fuel, which leverages the rich first-party audience data of Cars.com with the ad tech capabilities of Dealer Inspire to deliver the industry's first targeted video advertising solution. It is our fastest-growing media solution and has delivered significant market share gains for our customers. And most recently, we further empowered shoppers and sellers with digital financing and trade-in technology through the acquisitions of Credit IQ and AccuTrade, giving us robust vehicle financing, buying, and appraisal solutions. Our strategic investments, combined with the team's focused execution, have expanded our industry footprint while elevating our user experience with integrated platform capabilities. These enhancements helped increase visits to our marketplace by more than 30% and helped grow ARPD double digits over the last five years. Importantly, our TAM has also expanded from 35 billion to over 50 billion. We're proud of this progress as we celebrate a quarter century of innovation and we will continue to execute and make disciplined investments to support our strong brand, audience engagement, and differentiated platform strategy. Now, let's turn back to our Q4 and full year results. For the year, we delivered an average of 26 million monthly unique visitors, an increase of 5% compared to the prior year. Throughout all of 2022, cars.com was ranked number one in Comscore's monthly unique visitor tracking. Due to our strong brand and organic audience, we continue to generate traffic more efficiently than our competitors. The strength of our high-intent audience, where 85% of our shoppers plan to purchase within six months, powers our platform. The 587 million annual visits to cars.com, combined with the hundreds of millions of visits across dealer-inspired websites, activates all of our solutions and generates immediate demand for our customers. And dealers increasingly benefit from this virtuous cycle, evidenced by our growing product adoption and year-over-year growth in ARPD. We continue to win market share for our website business throughout the year, adding more than 700 dealer-inspired website customers and bringing the total to 6,050 at year-end. Demand is also strong for AccuTrade as dealers prioritize sourcing used cars more efficiently. We finished the year with over 500 Accutrade connected customers and dealers appraised more than 600,000 vehicles during the year, either digitally from their websites or physically in their stores. Leveraging our proprietary vehicle valuation technology, we also generated more than 80,000 instant offers for consumers on our marketplace since launching in May. Unlike others who buy cars directly and compete with a dealer, Cars remains focused on being an enabler, empowering retailers to control the last mile of retail while remaining asset-light and software-driven. Since launching Credit IQ, more than 2,200 dealers have enabled shoppers to get instantly pre-approved on cars.com and dealer-inspired websites. Dealer adoption of Credit IQ continues as we are piloting soft credit applications and further enhancing consumer functionality with the addition of shop-by-payment. We continue to strengthen our platform and introduce solutions that enable dealers to drive retail improvements and compete on dimensions other than price. We recently launched the Dealer Experience Report, which offers personalized reports identifying consumer satisfaction scores across the entire dealership experience. Early feedback from our customers has been positive. Jack Weinzerl of BoardWalk Automotive Group said the experience review gives us a quick but critical snapshot of key dimensions of our customer experience and allows us to better identify areas of improvement and take action to make our business better. We believe that these consumer insights on the store experience will not only strengthen our marketplace retention, but also improve the overall retail automotive experience. As a result of our strong value delivery, we ended the year with 19,506 dealer customers, an increase of 327 compared to the prior year. We grew customers despite cancellations from large digital dealers, stemming from their own internal operational challenges. Even with this headwind and the continued challenges with OEM production and delayed model launches, we accelerated our revenue growth each quarter of the year, culminating in 6% year-over-year growth in the fourth quarter and grew ARPD by $28 compared to the prior year. Our strategy is working. Traffic remains strong, solutions are scaling, and our profitability and free cash flow remain robust. Looking ahead, the broader industry outlook is mixed due to supply chain and other macroeconomic factors. However, New vehicle sales are still forecasted to increase approximately 8% year-over-year, driven by pent-up consumer demand and improving production levels, including over 60 anticipated new car releases. New car average daily listings are also rising on our marketplace. They increased 74% compared to the prior year. However, they remain more than 60% below the pre-COVID period. Given these dynamics and our conservative posture of some OEMs, we remain cautious in our outlook for OEM and national revenue. That said, the used car market remains healthy, and we believe supply-demand dynamics will continue to support robust margins for dealers. Over the past 25 years, our business has proven to be essential, regardless of the inventory cycle. Additionally, as the industry shifts to digital solutions to better compete and evolve the retail experience, we are the optimal partner to empower this transition with our connected platform. In summary, our strategy continues to create exceptional value for our customers, company, and shareholders. We have tremendous opportunities to further drive profitable growth and lead our industry forward. Now, I'd like to turn the call over to Sonia to discuss our financial results for the fourth quarter, full year, and 2023 outlook. Sonia? Thank you, Alex.