Cars.com’s second quarter was met with a negative market reaction, as management acknowledged softness in dealer revenue despite stable year-over-year performance. CEO Alex Vetter attributed the flat sales to temporary dealer revenue declines, offset by growth in OEM and national revenue. He noted, “We grew dealer count both year-over-year and quarter-over-quarter, signaling a strong recovery and that our new go-to-market changes are working.” Management highlighted cost discipline and improved adjusted EBITDA margins, but also cited persistent caution among dealers and variability in advertising spend as factors limiting top-line momentum.
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Cars.com (CARS) Q2 CY2025 Highlights:
- Revenue: $178.7 million vs analyst estimates of $179.2 million (flat year on year, in line)
- Adjusted EPS: $0.41 vs analyst estimates of $0.42 (in line)
- Adjusted EBITDA: $50.9 million vs analyst estimates of $50.21 million (28.5% margin, 1.4% beat)
- Operating Margin: 8.5%, up from 5.3% in the same quarter last year
- Dealer Customers: 19,412, in line with the same quarter last year
- Market Capitalization: $800.6 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Cars.com’s Q2 Earnings Call
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Rajat Gupta (JPMorgan) asked about the cadence of revenue acceleration through the year; CFO Sonia Jain clarified that revenue and ARPD are expected to grow sequentially in Q3 and Q4 as new dealer additions and product repackaging take effect.
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Thomas Cauthorn White (D.A. Davidson) questioned declines in ARPD despite higher dealer count; Jain attributed this to a mix of more independent dealers with lower initial spend and the onboarding of solutions-first customers who may cross-sell over time.
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Naved Ahmad Khan (B. Riley Securities) inquired about AccuTrade customer retention and marketplace repackaging risks; CEO Alex Vetter highlighted that churn often results from individual changes rather than organizational ones, and repackaging is designed to add value rather than prompt dealer attrition.
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Joseph Robert Spak (UBS) sought clarity on OEM revenue as a future tailwind; Jain acknowledged ongoing OEM engagement and incremental sales but noted that visibility is limited and that scattered advertising dollars will depend on macro stability.
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Marvin Milton Fong (BTIG) asked how go-to-market changes are driving sales velocity and about expectations for dealer count growth despite seasonal weakness; Vetter pointed to leadership changes, improved data targeting, and integration of new solutions as key contributors to ongoing dealer growth.
Catalysts in Upcoming Quarters
In the coming quarters, our team will pay close attention to (1) the adoption and pricing impact of Premium and Premium Plus marketplace packages, (2) sustained growth in dealer count and ARPD as repackaging and cross-selling efforts mature, and (3) continued momentum in OEM and national revenue as industry advertising trends stabilize. The pace of AI feature adoption and its effect on lead quality will also serve as an important signpost for Cars.com’s competitive positioning.
Cars.com currently trades at $13.03, in line with $13.14 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
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