Cars.com Inc.

Good morning, ladies and gentlemen, and welcome to the CARS.com first quarter 2025 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, May 8, of 2025. I would now like to turn the conference over to Catherine Chen, 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. First Quarter 2025 Conference Call. With me today are Alex Sutter, CEO, and Sonia Jane, CFO. Alex will start by discussing the business highlights from our first quarter. Then, Sonia will discuss our financial results in greater detail along with our 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, 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 table 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 filing, 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 delivered a solid first quarter, making important progress on growth initiatives while also strengthening our bottom line. Revenue of $179 million was within our guidance range, and adjusted EBITDA was a highlight for the quarter, exceeding the high end of our expected range by more than a point. Strong free cash flow also enabled us to repurchase 22 million of shares during the quarter, which pays well ahead of our capital return commitment for the year. Before we get further into Q1 results, let's take a step back to ground our long-term strategy in light of the changes happening in automotive. Our platform strategy, which combines a leading and scaled consumer marketplace with dealer software tools, has been key to our diversified growth. there is still significant opportunity to deepen product penetration, and we are seeing elevated interest in Accutrade and Dealer Club as the industry focuses on used cars. Thoughtful product innovation, leveraging AI and data intelligence positions us well to meet industry demand to simplify car buying and selling. And the same is true for consumers, where our sustained investments in shopping tools and brand leadership are translating into record marketplace metrics. While we're not immune to near-term uncertainty that has affected the automotive outlook, the core value proposition of our platform remains incredibly strong and arguably even more relevant for the industry today. We gained share in each of our end markets to exit March with much stronger momentum relative to the soft start in January that we discussed on our last call. Dealer count rose to 19,250 dealers. the best quarter of sequential organic customer growth since mid-2022. Our solutions portfolio was a standout in Q1, adding over 100 new website customers and additional AccuTrade subscribers. For consumers, our in-depth editorial and news coverage of tariffs is resonating with shoppers, helping set a new record for unique visitors in Q1. As a result, OEM business also grew 6% year-over-year. reflecting the value automakers place on our high-quality and market audience. These broad-based improvements, from unit growth to operational efficiency, are strong signals that dealer revenue will return to year-over-year growth. We are also particularly well-placed to benefit from the emerging tailwinds in the marketplace and used car solutions. The Cars.com marketplace is supporting a surge in consumer interest that peaked in March and stayed strong through April. reflecting a better user experience as well as incremental demand from tariff-motivated shoppers. A record 29 million average monthly unique visitors utilized CARS.com to browse, research, and submit leads in Q1. Overall traffic of 170 million visits was also up 1% year-over-year after adjusting for an extra lead day in 2024. Specifically, traffic to our news and editorial content was up more than 50% year-over-year, driven by resources like our American-Made Index. Multi-year investments in brand marketing and editorial are producing clear and strong ROI for our marketplace, and we expect to sustain engagement with content like our Affordability Report and the next American-Made Index update due in June. Attribution and marketplace analytics also remain at the forefront of our engineering and product development roadmap. In the second quarter, we'll be incorporating additional data intelligence into cars.com leads, expanding dealers' access to important and actionable insights like consumer shopping behavior and estimated budget. We expect this enhancement to improve lead quality and also boost long-term dealer satisfaction. This feature will be bundled into Marketplace packages and another example of our commitment to enhancing value delivery. We're optimistic that audience strength and product innovation combined with new commercial leadership will help Marketplace contribute to overall dealer revenue growth in 2025. Turning to the supply side, we are well positioned to drive adoption of AccuTrade and Dealer Club as the market focuses on acquiring used vehicle inventory. Accutrade appraisal volume was up over 813,000 appraisals in Q1, up a substantial 16% quarter-over-quarter, and putting us well on our way to over 1 million quarterly appraisals. On an appraisal-per-dealer basis, the 14% quarter-over-quarter increase in Q1 was the best sequential growth we've seen since starting to track this metric. This strong activity points to not only the success of our redesigned sales onboarding and account management support model, but also the increasing importance of acquiring in-demand, late model, high-quality vehicles directly from consumers. On average, the top quartile of Accutrade users acquired nearly 50 cars through the service lane in February and March, demonstrating the importance and scale of Accutrade's impact. Dealer Club, the latest addition to our platform, also opens up a new channel for used vehicle acquisition or disposal via transparent, reputation-based dealer-to-dealer auctions. In its first two months of integration with the Cars Commerce platform, Dealer Club increased active users by 60% and nearly doubled its volume of completed transactions from February to March. We also grew our pipeline by over 2,500 prospects in Q1 alone, leveraging our industry reach to accelerate dealer adoption. Dealer Club users have already benefited from early integration with the Cars Commerce platform, which I also note has been some of our fastest development work to date. In Q1, we updated Dealer Club options with AccuTrade pricing data, providing real-time insights to empower informed buying and selling decisions. Just last week, we also turned on the one-click ability for dealers to push AccuTrade appraisals directly into dealer club auctions. Looking ahead, we plan to use our inventory intelligence to help dealers identify aging inventory on our marketplace or retail websites to manage inventory lifecycle within our platform. Shifting to progress on websites, Dealer Inspire and D2C Media were up nicely in Q1, adding over 100 new customers quarter over quarter. Shortened website time to launch and improved website speed and performance both contributed to the net growth we achieved in the quarter. Moving to our OEM and national business, Q1 revenue was up 6% year over year, and around one-third of our OEM partners increased their spending on cars commerce media. However, late in the quarter, there were early signs from a handful of OEMs looking to more closely manage their media commitments. With auto industry outlook being revised down for the year, we need to operate on the basis that that media spending trend may persist, putting pressure on new car sales for OEMs and franchise dealers. Based on those trends, we believe it's prudent to suspend full-year revenue guidance until external visibility improves. However, the value of our platform remains clear, and we're focused on driving commercial improvements platform innovation, and product adoption, and we remain confident in our ability to drive full year revenue growth. We have also consistently demonstrated sustained cost discipline. Our existing cost controls are performing well, and we have additional operating levers to manage the business across a range of macroeconomic scenarios. As such, we are reaffirming our adjusted EBITDA guidance. In closing, Q1 produced many positive key takeaways that give us confidence and our ability to deliver consistent growth and long-term value creation. Our business is fundamentally strong and resilient, and we believe that we're poised for growth in the current cycle. We're confident that we can execute through dynamic external conditions and reaccelerate our growth trajectory. Now, I'll turn the call to Sonia to discuss first quarter financial performance and our outlook. Sonia.