Cars.com Inc.

Good morning, ladies and gentlemen, and welcome to the CARS First Quarter 2026 Earnings Conference Call. At this time, all lines are in your 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 0 for the operator. This call is being recorded on Thursday, May 7, 2026. I would now like to turn the conference over to Catherine Chen, Vice President of Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining us for the Cars.com Inc. First Quarter 2026 Conference Call. With me this morning are Toby Hartman, CEO, and Sonia Jain, CFO. Toby will start by discussing 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 Toby, 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, including adjusted EBITDA, adjusted EBITDA margin, adjusted operating expenses, adjusted net income, and free cash flow. Reconciliations of these non-GAAP 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 Toby.

Thank you, Catherine, and thank you to everyone joining us to review first quarter 2026 results. On our call in February, we set forth near-term goals to better realize the potential of our business and put cars.com on a stronger growth and value creation trajectory. We have made solid progress against those objectives in Q1 and early Q2, as we built a leading automotive marketplace experience. First, we delivered on our financial commitments. Q1 revenue of $180.2 million was toward the high end of guidance and the third consecutive quarter of year-over-year growth. Adjusted EBITDA margin of 28.3% exceeded guidance by over a full percentage point. And free cash flow remained strong up 42% year-over-year and reflecting higher conversions from EVDA. Second, we have taken immediate cost actions. We closely examined operations to identify efficiencies and opportunities to reshape our organization into more nimble, marketplace-focused teams. During this process, We identified $25 to $30 million of recurring annualized operating cost savings to create a healthier foundation to support future growth. Third, we are leveraging existing assets and data to rapidly launch new features that improve our marketplace value. Cars.com MCP integrations for authentic AI platforms and conversational capabilities for our Carson shopping assistant are examples where we have adapted to match new shopping behavior. Consumers were more than four times as likely to submit a lead after having a conversation with Carson, demonstrating our efficacy at stimulating purchase intent. These are positive and necessary steps to start the year and reinforce our confidence in our 2026 growth guidance. We also increased our 2026 share repurchase target to $19 million to further enhance shareholder value creation. Overall, the start of the year has been productive and the teams have moved with speed to secure wins. In terms of our three 2026 initiatives, we have pushed hard on controllables such as cost containment. Other changes, like the green shoots in product and marketplace, are compelling, though will take some time to mature. But we are clear on the strategy that we need to execute for the rest of the year. Historically, we have grown our product as distinct and loosely affiliated pinners. But moving forward, to truly maximize our value, we must integrate into one interconnected marketplace-centric ecosystem. For car seekers, we will offer relevant and desirable listings across marketplace and dealer websites, trusted data insights, and an AI-first user experience. For car sellers, our combined marketplace and appraisal capabilities will evolve into an essential resource for used car insights. And dealers and OEMs will continue to benefit from our scaled in-market audience, but with even better ROI based on our unique first-party retail signals across marketplace, websites, and media. Our marketplace model will drive legal transactions at scale by focusing on these differentiators. Investing in product is key to powering our marketplace flywheel and long-term growth. Let me give you some examples of our accelerated product output in the first four months. Starting with AI, model context protocol integrations are helping our discoverability on leading agentic AI platforms such as JetGPT. Consumers can now browse our marketplace inventory directly within native LLM environments before submitting leads on cars.com. And this has added value for existing marketplace dealers who are eager to tap into agentic commerce. LLMs are still sub 1% of our traffic, and we are well positioned to benefit as these platforms grow. Turning to our own platform, Conversational Carson, is a positive step towards continued personalization of the marketplace shopping experience. Finally, the Cars.com dealer app just launched in April, putting a mobile command center in the hands of marketplace dealers. Early features include AI-generated summaries of performance metrics, lead follow-up alerts, and pricing intelligence. We believe our app has the broadest analytics set among our competitors, translating to the best ROI on every sales appointment and wholesale transaction. We expect greater product development velocity will continue to deliver a steady and diverse cadence of future releases. Cross-pollination, such as bringing Accutrade data into marketplace listings, will be an increasing focus in the second half of the year. Turning to the remaining initiatives, Sonia will offer more cost detail in her remarks. The actions we took in April support our stated intention to grow adjusted EBITDA at a faster rate than revenue. We have also been clear that we must operate with better processes and organizational structure to successfully execute our marketplace strategy and grow LTV. From a go-to-market perspective, new product bundles will help clearly articulate platform value. Our products will be packaged according to integrated value delivery, which we expect to drive faster adoption than selling individual point solutions. For example, our data shows that customers with both Accutrade and the Cars.com marketplace, the inventory terms speed up by an average of six days. A combined marketplace and appraisal offering would not only drive dealership gross profits, but also eliminate the paradox of choice for a customer facing too many a la carte options. We have reorganized the sales team accordingly to break down product-based silos, eliminate duplication, and make the sales process simpler for dealers. Combined with our ongoing localization efforts, we feel front-footed in our ability to increase overall sales productivity. For our current customers, we are fully focused on enhanced value delivery. Our leads and connections already influence more than 30% of our customers' vehicle sales. We will keep pressing this advantage with a balanced approach to top and lower funnel activities that maximizes ROI on our platform. We are committed to operating a scaled platform, so metrics like traffic and UVs may move depending on quarterly marketing mix. Most recently, Q1 traffic and UVs were pressured by a tough year-over-year comp from pull-forward tariff demand in the broader industry in 2025. Setting aside this one-time impact, our underlying direct traffic remains strong. Organic traffic was close to 60% of total mix in Q1, which is similar to our historical average, even with the advent of LLMs. Direct traffic conversion was also up meaningfully year over year and reflected in robust lead volume growth. Longer term, we have confidence that our strong brand, improving user experience, and listings inventory will fuel continued marketplace strength. To recap, We delivered against revenue expectations and outperformed an adjusted EBTA. We are changing the way we operate to drive stronger financial results in operating metrics. We are executing to transform into the leading trusted automotive marketplace, connecting consumers, dealers, and OEMs. And in the process, we will create meaningful and sustainable shareholder value. Now, Sonia will discuss our financial results and outlook. Sonia?