Cars.com Inc.

Good morning, ladies and gentlemen. Welcome to CARS' fourth quarter 2024 earnings conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, February 27, 2025. I would now like to turn the conference over to Ms. Catherine Chen, Vice President of Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining us. It's my pleasure to welcome you to the CARS.com, Inc. Fourth Quarter and Full Year 2024 Conference Call. With me this morning are Alex Fetter, CEO, and Sonia Jain, CFO. Alex will start by discussing the business highlights from our fourth quarter and full year. Then Sonia will discuss our financial results in greater detail along with our 2025 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'll be discussing certain non-GAAP financial measures today, including adjusted EBITDA, adjusted EBITDA margin, adjusted operating expenses, adjusted net income, and free cash flow. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures 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. And now I'll turn the call over to Alex.

Thank you, Catherine. We have a strong 2024 delivering record full-year revenue, adjusted EBITDA growth, and powerful product innovation that fueled the expansion of our leading digital automotive platform. Revenue of $719 million was up 4% year-over-year, and we drove nearly a full point of margin improvement. Free cash flow of $128 million also reached a multi-year high, reflecting operating discipline and the strength of our asset-light business model. For the fourth quarter, we extended our track record to 17 consecutive quarters of year-over-year revenue growth. OEM and National meaningfully outperformed, up 15% year-over-year, to its best quarterly revenue since 2021. On the bottom line, our strong cost discipline enabled us to exceed adjusted EVTA margin expectations. More broadly, we're seeing increased dealer engagement and usage of our solutions and just crossed the 1,000 subscriber mark for Accutrade. And for Cars.com, we're also seeing continued robust traffic gains heading into 2025, reinforcing our marketplace leadership. Altogether, the momentum behind our diverse growth drivers gives us confidence that we can operate through dynamic economic conditions and accelerate growth throughout the year. Our platform vision is differentiated and clear with best-in-class solutions that enable automotive retail and wholesale operations with tangible results. We've made significant progress to bring new and innovative products to market in the past year, culminating in our most recent acquisition of Dealer Club. Each solution on our platform is connected and empowers dealerships to participate in a race to the top. focused on efficiency, quality, and reputation to win consumers rather than a race to the bottom on lead arbitrage and forced price cuts that lure consumers but erode dealer profitability. In 2025, we're focused on accelerating our growth by increasing sales velocity, improving our packaging and value delivery, and continuing to bring new innovative products and enhancements to markets. Our execution in 2024 and early Q1 provides us with a strong springboard to achieve these goals. To support these initiatives, we are pleased to announce the appointment of Lisa Gosselin as our new Chief Commercial Officer. Lisa is a transformative leader with a proven track record of accelerating revenue growth and go-to-market strategies across SaaS, ad tech, and data. We're excited to have her guide the next phase of our commercial strategy, focusing on key growth drivers such as dealer customer growth and unlocking the cross-sell. We're also grateful to Doug Miller, who oversaw the expansion of our platform through multiple acquisitions, launched our unified cars commerce commercial brand, and created an inspiring sales culture that we're proud to build upon. Now, let's turn to a review of our Q4 performance and our 2025 growth priorities across each area of our business. Starting with Accutrade, we're now in over 1,000 dealerships, changing how the industry acquires used cars. Dealers increasingly view Accutrade as a valuable tool to source trade in, driving annual appraisal volume up 35% year-over-year, and the number of vehicles being acquired post-appraisal per dealer was up 23% year-over-year in Q4. As we build our sales pipeline, we're pleased to announce eight new OEM endorsements for Accutrade, from Maserati, BMW, MINI, Subaru, and Genesis, just to name a few. Endorsements play a key role in driving dealer adoption of new tools. Close to 30% of AccuTrade franchise dealer launches in Q4 were associated with dealers who have the option to utilize AccuTrade as an endorsed trade-in and appraisal solution. Based on a typical two to three month AccuTrade sales cycle, these recent endorsements from December and January should begin to contribute more meaningfully to launch volume in the second quarter and lift ARPD. And we're excited to expand Accutrade's capabilities, which I'll talk about in a moment. Our Cars.com marketplace continues to dominate consumer mindshare and deliver in-market shoppers and high-quality traffic and leads to dealers at scale. In the fourth quarter, we reached over 23 million shoppers who collectively drove over 143 million visits to cars.com. Repeat visitation was up 6% year over year and has been up each quarter of 2024 as we win high-intent buyers through continuous product innovation. In fact, in December, we led our competition on monthly unique visitors and average time on site, giving us a strong start to 2025 and a powerful signal that our brand investments AI-enhanced shopping tools, leading user experience, and proprietary content are winning over consumers. Recall, over 60% of our traffic mix is also organic, and we're invested to sustain this leadership through editorial and brand marketing, such as our annual Best of Awards that were just announced in February. This strategy yields greater long-term benefits and sustained advantages for our brand. Based on its consistently strong marketplace performance, our primary goals this year are to help dealers better understand attribution from cars.com traffic and leads, enhance packaging with complementary features, and align pricing with value delivery. Helping dealers gain clarity on attribution immediately elevates our impact, embeds us within dealership operations, and highlights the competitive advantage of utilizing our proprietary data insights. For instance, Cars.com delivers more traffic to dealer websites than our peers, and that traffic converts 70% better than Google, where dealers spend the majority of their budgets. We anticipate packaging more of our platform value, like additional media, into our dealer offering to drive optimal outcomes for customer needs, especially knowing that customers who adopt more than one solution see double the volume of leads and consumer engagement. For dealer websites, we see parallel growth opportunities to our marketplace initiatives. We power over 7,600 dealer-inspired and D2C websites in the fourth quarter, and D2C specifically has reached 1,100 customers in Canada. Based on the product enhancements we have made with websites, our focus for the year is on repackaging, legacy agreements, and migrating customers into higher tier packages that better capture the true capabilities and synergies off our platform. We also expect our OEM and national business to be an important contributor to total enterprise growth in 2025. In Q4, OEM and national revenue was up 15% year over year, handily exceeding our expectations and pushing full-year growth to 18%. As inventory levels normalize, we believe more manufacturers will increase marketing investments to reach in-market shoppers. Already in 2025, upfronts, which are marketing dollars committed to us by OEMs at the start of the year, are up double digits year over year. We expect to win incremental OEM dollars on top of committed spending, not only through media, but also with products like New Car Hub, which the majority of our OEM partners have expressed interest in testing during 2025. Looking ahead, our 2025 product roadmap aims to deepen differentiation and stimulate cross-selling across our platform, particularly with our newly expanded trade, appraisal, and now connected wholesale marketplace. In January, we announced the acquisition of Dealer Club, a reputation-based dealer-to-dealer wholesale marketplace that strategically augments our platform capabilities. This deal launches us into a $10 billion wholesale market with clear and distinct value proposition. First, our transparent auctions with seller ratings create more successful transactions while lowering arbitration risks and costs. Since inception, less than 1% of dealer clubs' auctions have resulted in meaningful arbitration or goodwill expense. Second, integration with AccuTrade's market-leading valuation algorithms and condition reports are superior to manual inspections for appraisal velocity and accuracy. And finally, scaling with technology rather than a legacy labor model means a faster path to sustainable, profitable growth. Dealer Club also unlocks the full potential of our new inventory intelligence platform, or IIP, a disruptive inventory management system that offers AI and ML-powered inventory pricing and market insights drawn from our unparalleled first-party demand data. IIP's predictive analytics can estimate time on lot, daily depreciation, and other variables which are used to create customized vehicle acquisition and exit strategies that optimize profit per vehicle. In other words, dealers can leverage IIP's real-time insights to evaluate the profitability and health of their on-the-lot inventory and quickly determine which vehicles should be retailed on our consumer marketplace or wholesale through dealer club auctions. As we look at the dealer inventory on our marketplace and dealer websites, we can identify, on average, over 200,000 cars on dealer lots that are over 90 days old. By leveraging our inventory intelligence platform, we can reduce the risk of diminishing returns on aging inventory and solve a real and persistent problem for dealers. And capturing even 1% of the wholesale market opportunity by directing these vehicles to Dealer Club would mean $100 million plus transactional revenue stream for the business. Ultimately, we believe the ecosystem consisting of our cars.com marketplace, Accutrade, the inventory intelligence platform, and now Dealer Club will make us essential for success. There's still meaningful product work to be done, but our teams are laser-focused on hitting critical development and integration milestones to speed our revenue capture, attract new dealers to our platform, and disrupt traditional auctions to drive the industry forward. Collectively, new sales leadership, ongoing repackaging work, and accelerated product innovation and expansion are the basis for achieving sustained organic growth for 2025 and beyond. These initiatives also position us for improvement in dealer count and ARPD as overall growth compounds in the second half of the year. We have numerous opportunities ahead and are committed to driving continuous improvement on both the top and bottom line as we grow our industry-leading platform and solutions while scaling Dealer Club and adding a new transactional revenue stream to our mix. Now, I'll turn the call over to Sonia to discuss fourth quarter financial performance and our outlook. Sonia?