Cars.com Inc.

Thank you very much. First, by adding current marketplace capabilities. This includes personalization, AI features like Carson and interconnected data insights between our products. For consumers, that means a more seamless and customized shopping experience when moving across cars.com and dealer-inspired websites. We will provide seekers with more options and choices for an interconnected marketplace experience. For dealers, aggregated consumer signals yield return leads and a distinct advantage to closing sales. These enhancements plus further technical and product investments slated for 2027 are expected to position our website's business for renewed growth. In summary, we have made solid progress to deliver our goals and objectives. Our 2026 financial performance have consistently met or exceeded guidance. Marketplace results are especially encouraging and reflect strong execution of our new strategy. Operating leverage is also improving via cost efficiencies, tighter internal processes, and a leaner yet more productive organization. And product green shoots are showing the untapped potential of an interconnected marketplace platform. I want to acknowledge the discipline, hard work, and focus of our team whose execution and collaboration has been instrumental to these initial successes. We are confident that these efforts will compound to drive long-term sustainable growth and shareholder value. Now Sonia will discuss our financial results and outlook. Sonia?

Thank you, Toby. Second quarter financial performance highlighted strong execution of our marketplace-first strategy and improved operating leverage across our business. Revenue of $179.9 million was up 1% year over year and within our guidance range. Dealer revenue growth was up 3% year over year and was slightly offset by the anticipated decline in OEM and national revenue, which was down 18% year over year. Within dealer revenue, robust marketplace growth more than offset flat-to-down performance for solutions and media products. ARPD and dealer count also broadly followed these same trends. Q2 ARPD of $2,500 was up 3% year-over-year and 1% quarter-over-quarter. Marketplace was the primary contributor to this year-over-year improvement, and we set a new record for marketplace-only ARPD during Q2. Premium Plus was up quarter over quarter and the fastest growing of our three marketplace packages, further supporting favorable pricing mix. We're making progress towards our stated 15% target adoption rate for 2026. However, lower uptake of add-on dealer media products remained a near-term headwind, partially offsetting gains from core marketplace adoption. Consolidated dealer count reflected similar puts and takes. Marketplace subscribers were up year over year and quarter over quarter. However, website units declined compared to a year ago, consistent with our view that future DI growth hinges on product innovation and packaging rather than unit volume expansion. Therefore, we're applying the same product-led approach that has worked well for Marketplace. Step one is bringing existing Marketplace capabilities to websites in Q3 and Q4, an efficient way to strengthen our focus on DI product innovations. As Toby also mentioned, we launched dealer-verified listings in June. This is an important first step as we integrate our product offerings to capture greater platform value, simplify go-to-market motions, and unlock new cross-selling opportunities. Dealer-verified listings are currently available to existing AccuTrade customers, and in Q4, we will begin expanding this feature to marketplace customers to drive further growth and adoption. As we migrate towards a more integrated marketplace and appraisal bundle, individual point sales of AccuTrade will become less relevant to our strategy. However, it's worth noting that AccuTrade subscribers were roughly flat sequentially in Q2, even as we retool our offering. Rounding out our revenue discussion, OEM and national revenue was down $3 million year over year in Q2. We signaled in May that this quarter would represent a trough in OEM revenue. Based on positive performance in July and incremental spend commitments for the remainder of the year, we anticipate quarter-over-quarter growth in Q3. Now to discuss cost. Second quarter operating expenses were $152.1 million, down 7% year-over-year. We drove operating leverage across the organization, maintaining strong cost discipline and a continued focus on process efficiencies. A meaningful decline in depreciation and amortization expense following the full amortization of customer lists tied to our 2017 spinoff, combined with lower compensation costs, accounted for the majority of the year-over-year delta. Q2 adjusted operating expenses were $144.3 million, down 6% year-over-year from the same cost levers. For the following line item detail, all comparisons are on a year-over-year basis unless otherwise noted. Product and technology expenses decreased $2.7 million on a reported basis and $2.5 million on an adjusted basis. Lower compensation expense related to streamlining our processes and improving interconnectivity and improvements in our capitalization rate drove both the reported and adjusted decrease. Marketing and sales increased roughly $2.7 million on both a reported and adjusted basis, largely driven by targeted marketing to prioritize value delivery. General and administrative expense was down $3.5 million on a reported basis and roughly $1 million on an adjusted basis. The reported decrease was primarily due to the elimination of the D2C earn-out expense accrual and lower compensation expense. As a reminder, the D2C earn-out is considered a special item and not included in adjusted operating expenses, which accounts for the delta between the decline in reported and adjusted G&A expenses. Second quarter net income was $14.3 million, or 25 cents per diluted share, compared to net income of $7 million, or 11 cents per diluted share, a year ago. Net income was primarily driven by improved operating income. Adjusted net income for the second quarter was $28.7 million, or 51 cents per diluted share, compared to $26.4 million, or 41 cents per diluted share, a year ago. Adjusted EBITDA of $53 million in the second quarter was up 4% year over year, healthily outpacing revenue growth and clearly showing the early impact of our process, cost, and organizational improvements. Adjusted EBITDA margin of 29.4% was up nearly 100 basis points year over year. Moving to the cash flow statement and balance sheet. Net cash provided by operating activities totaled $55.6 million for the first half of the year. Thank you for joining us. We are pacing well towards our 2026 share repurchase target of $90 million through opportunistic deployment of our free cash flow in the first half of 2026. Lastly, debt outstanding was $450 million as of June 30, 2026, which includes a $5 million debt payment during the second quarter. Total liquidity was $333.3 million as of June 30, 2026, and we have ample capacity for our capital allocation needs. Finally, we'll conclude with outlook. Third quarter revenue growth is expected to be flat to up 2% year over year, based on continued dealer revenue growth and marketplace improvement, and quarter over quarter improvement for OEM and national revenue. Third quarter adjusted EBITDA margin is expected to be between 28.5 and 29.5%, benefiting from continued cost and operational discipline. Lastly, We are also reaffirming our full year 2026 guidance of flat to 2% revenue growth and adjusted EBITDA margin of 29 to 30%.

And with that, I'd like to open the line for Q&A.