The following discussion and analysis of our business, financial condition, results of operations and quantitative and qualitative disclosures should be read in conjunction with our unaudited interim consolidated financial statements ("Consolidated Financial Statements") and related notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion and analysis also contains forward-looking statements and should be read in conjunction with the disclosures and information contained in "Note About Forward-Looking Statements" in this Quarterly Report on Form 10-Q. The financial information discussed below and included elsewhere in this Quarterly Report on Form 10-Q may not necessarily reflect what our financial condition, results of operations and cash flows may be in the future.
References in this discussion and analysis to "we," "us," "our" and similar terms refer to Cars.com Inc. and its subsidiaries, collectively, unless the context indicates otherwise.
Business Overview. Cars.com Inc. is a trusted audience-powered and data-driven technology platform that simplifies buying and selling cars. The flagship Cars.com marketplace connects millions of consumers to dealerships across the U.S., powering the car buying experience with artificial intelligence shopping tools and comprehensive vehicle reviews and content. Our interconnected ecosystem of products enables dealers and OEMs to sell more cars by efficiently leveraging our marketplace, dealer websites, trade and appraisal tools and proprietary in-market media solutions.
Overview of Results
Three Months Ended June 30, Six Months Ended June 30,
(in thousands) 2026 2025 2026 2025
Revenue $ 179,934 $ 178,739 $ 360,157 $ 357,763
Net income (1) 14,263 7,009 19,241 4,996
(1)During the three months ended March 31, 2026, we recorded $8.5 million of expense associated with a plan to reduce our operating expenses and realign our resources via an 11% reduction in workforce. These costs are comprised of one-time termination benefits, substantially all of which is related to employee severance and substantially all of which was paid during the three months ended June 30, 2026.
Key Operating Metrics
We regularly review a number of key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make operating and strategic decisions. Key Operating Metrics are as follows (Traffic and Average Monthly Unique Visitors in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 % Change 2026 2025 % Change
Traffic 142,990 162,036 (12 )% 302,552 332,123 (9 )%
Average Monthly Unique Visitors 22,807 26,649 (14 )% 24,300 27,848 (13 )%
June 30, 2026 June 30, 2025 % Change March 31, 2026 % Change
Dealer Customers 19,343 19,412 (0 )% 19,390 (0 )%
Monthly Average Revenue Per Dealer $ 2,500 $ 2,435 3 % $ 2,473 1 %
Average Monthly Unique Visitors ("UVs") and Traffic. UVs and Traffic are fundamental to our business. They are indicative of our consumer reach and the level of engagement consumers have with our platform. Although our consumer engagement does not directly result in revenue, we believe our ability to reach in-market car shoppers is attractive to our dealers, OEMs and national customers and a primary reason they do business with us. We believe we have achieved audience scale as measured by UVs and Traffic. Traffic is driven by a combination of UVs visiting our properties, repeat visitation and engagement. We monetize impressions, clicks and other connections that result from traffic to our site via our products and services.
We define UVs in a given month as the number of distinct visitors that engage with our platform during that month. Visitors are identified upon first visit to an individual Cars.com property on an individual device/browser combination or installation of one of our mobile apps on an individual device. If a visitor accesses more than one of our web properties or apps or uses more than one device or browser, each of those unique property/browser/app/device combinations counts toward the number of UVs. Traffic is defined as the number of
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visits to Cars.com desktop and mobile properties (responsive sites and mobile apps). We measure UVs and Traffic via RudderStack. These metrics do not include traffic to Dealer Inspire, D2C Media or DealerClub websites.
UVs decreased 14% and 13% for the three and six months ended June 30, 2026, respectively, and Traffic decreased 12% and 9% for the three and six months ended June 30, 2026, respectively, which primarily reflects intentional marketing shifts towards effectively capturing high-intent consumer demand.
Dealer Customers. Dealer Customers represent dealerships using our products as of the end of each reporting period. Each physical or virtual dealership location is counted separately, whether it is a single-location proprietorship or part of a large, consolidated dealer group. Multi-franchise dealerships at a single location are counted as one dealer. Dealer Customer metrics do not include DealerClub.
For the three months ended June 30, 2026, Dealer Customers remained flat compared to each of the three months ended June 30, 2025 and March 31, 2026, as an increase in marketplace customers was offset by a decrease in digital solutions customers.
Monthly Average Revenue Per Dealer ("ARPD"). We believe that our ability to grow ARPD is an indicator of the value proposition of our platform. We define ARPD as Dealer revenue, excluding digital advertising services and DealerClub, during the period divided by the monthly average number of Dealer Customers during the same period.
For the three months ended June 30, 2026, ARPD increased 3% compared to the three months ended June 30, 2025, primarily reflecting the adoption of new marketplace packages and ongoing improvements in value delivery, partially offset by declines in dealer media.
For the three months ended June 30, 2026, ARPD increased 1% compared to the three months ended March 31, 2026, primarily reflecting the continued benefits of adoption of new marketplace packages and ongoing improvements in value delivery.
Factors Affecting Our Performance. Our business is impacted by changes in the larger automotive ecosystem, including supply and demand for new and used vehicle inventory, geopolitical incidents, global supply chain and information systems disruptions, semiconductor and raw material shortages, vehicle acquisition cost, vehicle retail prices, the rate of electric vehicle adoption, employee retention and changes related to automotive advertising, among other macroeconomic factors including the political environment, inflationary and affordability pressures, tariffs and prevailing interest rates. Changes in vehicle sales volumes in the United States and Canada also influence OEMs’ and dealerships’ willingness to increase investments in marketing spend and technology solutions and could impact our pricing strategies and/or revenue mix.
Our long-term success depends in part on our ability to attract and engage an in-market audience, to grow inventory supply and our dealer customers, to expand our relationship with dealers through greater adoption of our product offering, to transform our OEM relationships and to create operating leverage. We believe our core strategic strengths, including our Cars.com brand, our growing high-quality audience and suite of digital solutions for dealers and OEMs, including AI-based tools, position us to navigate a rapidly changing automotive environment.
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Results of Operations
Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025
Three Months Ended June 30,
(In thousands, except percentages) 2026 2025 $ Change % Change
Revenue:
Dealer $ 163,348 $ 158,477 $ 4,871 3 %
OEM and National 13,641 16,637 (2,996 ) (18 )%
Other 2,945 3,625 (680 ) (19 )%
Total revenue 179,934 178,739 1,195 1 %
Operating expenses:
Cost of revenue and operations 30,285 30,605 (320 ) (1 )%
Product and technology 26,687 29,417 (2,730 ) (9 )%
Marketing and sales 60,737 58,067 2,670 5 %
General and administrative 17,006 20,531 (3,525 ) (17 )%
Depreciation and amortization 17,343 24,873 (7,530 ) (30 )%
Total operating expenses 152,058 163,493 (11,435 ) (7 )%
Operating income 27,876 15,246 12,630 83 %
Nonoperating expense:
Interest expense, net (7,397 ) (7,644 ) 247 (3 )%
Other (expense) income, net (953 ) 2,366 (3,319 ) ***%
Total nonoperating expense, net (8,350 ) (5,278 ) (3,072 ) 58 %
Income before income taxes 19,526 9,968 9,558 96 %
Income tax expense 5,263 2,959 2,304 78 %
Net income $ 14,263 $ 7,009 $ 7,254 ***%
*** Not meaningful
Dealer revenue. Dealer revenue is typically subscription-oriented and consists of marketplace, digital experience, including website solutions, trade and appraisal and media products sold to dealer customers. Dealer revenue is our largest revenue stream, representing 91% and 89% of total revenue for the three months ended June 30, 2026 and 2025, respectively. Dealer revenue increased $4.9 million or 3%, primarily due to growth in marketplace customers, partially offset by a decline in our media products.
OEM and National revenue. OEM and National revenue largely consists of media solutions products, including display advertising and other solutions to OEMs, advertising agencies, automotive dealer associations and auto adjacent businesses, including insurance companies. OEM and National revenue represented 7% and 9% of total revenue for the three months ended June 30, 2026 and 2025, respectively. OEM and National revenue decreased $3.0 million or 18%, primarily due to shifts in spending by OEM partners.
Other revenue. Other revenue primarily consists of revenue related to vehicle listing data sold to third parties. Other revenue represented 2% of total revenue for each of the three months ended June 30, 2026 and 2025. Other revenue decreased $0.7 million or 19%.
Cost of revenue and operations. Cost of revenue and operations expense primarily consists of costs related to processing dealer vehicle inventory, product fulfillment and compensation and severance costs for the product fulfillment and customer service teams. Cost of revenue and operations expense represented 17% of total revenue for each of the three months ended June 30, 2026 and 2025. Cost of revenue and operations decreased $0.3 million or 1%, primarily due to lower compensation, partially offset by higher third-party costs.
Product and technology. The product team creates and manages consumer and customer-facing innovation and consumer and customer experience. The technology team develops and supports our products, websites and mobile apps. Product and technology expense includes compensation costs, consulting and contractor costs, hardware and software maintenance, software licenses, other infrastructure costs, severance costs and costs related to the write-off of assets. Product and technology expense represented 15% and 16% of total revenue for the three months ended June 30, 2026 and 2025, respectively. Product and technology expense decreased $2.7 million or 9%, primarily due to lower compensation.
Marketing and sales. Marketing and sales expense primarily consists of traffic and lead acquisition costs, performance and brand marketing, trade events, compensation costs and travel for the marketing, sales and sales support teams, severance costs and bad debt expense related to the allowance for doubtful accounts. Marketing and sales expense represented 34% and 32% of total revenue for the
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three months ended June 30, 2026 and 2025, respectively. Marketing and sales expense increased $2.7 million or 5%, primarily due to higher spend, building consumer awareness to more effectively capture high-intent demand.
General and administrative. General and administrative expense primarily consists of compensation costs for certain of the executive, finance, legal, human resources, facilities and other administrative employees. In addition, general and administrative expense includes the cost of legal, accounting and other professional services, severance costs, office space, transformation and other exit costs and transaction-related costs. General and administrative expense represented 9% and 11% of total revenue for the three months ended June 30, 2026 and 2025, respectively. General and administrative expense decreased $3.5 million or 17%, primarily due to a reduction in costs as a result of the conclusion of the D2C Media earnout period and lower compensation, partially offset by higher third-party costs. For more information on the D2C Media earnout, see the "Liquidity and Capital Resources" section below.
Depreciation and amortization. Depreciation and amortization expense decreased $7.5 million or 30%, primarily due to certain intangible assets being fully amortized as compared to the prior-year period and the accelerated depreciation associated with our amended headquarters office lease in the prior-year period.
Interest expense, net. Interest expense, net decreased $0.2 million or 3%, primarily due to a reduction in total indebtedness compared to the prior-year period and lower interest rates as well as higher interest income. For information related to our debt, see Note 5 (Debt) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.
Other (expense) income, net. Other (expense) income, net changed primarily due to unrealized losses on foreign currency denominated transactions.
Income tax expense. Income tax expense changed primarily due to the increase in income before income taxes.
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Results of Operations
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
Six Months Ended June 30,
(In thousands, except percentages) 2026 2025 $ Change % Change
Revenue:
Dealer $ 326,355 $ 317,621 $ 8,734 3 %
OEM and National 27,920 32,916 (4,996 ) (15 )%
Other 5,882 7,226 (1,344 ) (19 )%
Total revenue 360,157 357,763 2,394 1 %
Operating expenses:
Cost of revenue and operations 62,026 62,088 (62 ) (0 )%
Product and technology 58,182 60,035 (1,853 ) (3 )%
Marketing and sales 122,555 120,607 1,948 2 %
General and administrative 38,824 41,416 (2,592 ) (6 )%
Depreciation and amortization 34,061 51,912 (17,851 ) (34 )%
Total operating expenses 315,648 336,058 (20,410 ) (6 )%
Operating income 44,509 21,705 22,804 ***%
Nonoperating expense:
Interest expense, net (14,628 ) (15,312 ) 684 (4 )%
Other (expense) income, net (1,639 ) 2,342 (3,981 ) ***%
Total nonoperating expense, net (16,267 ) (12,970 ) (3,297 ) 25 %
Income before income taxes 28,242 8,735 19,507 ***%
Income tax expense 9,001 3,739 5,262 ***%
Net income $ 19,241 $ 4,996 $ 14,245 ***%
*** Not meaningful
Dealer revenue. Dealer revenue represented 90% and 89% of total revenue for the six months ended June 30, 2026 and 2025, respectively. Dealer revenue increased $8.7 million or 3%, primarily due to growth in marketplace customers, ongoing improvements in value delivery and upgrades in website offerings, partially offset by a decline in our media products.
OEM and National revenue. OEM and National revenue represented 8% and 9% of total revenue for the six months ended June 30, 2026 and 2025, respectively. OEM and National revenue decreased $5.0 million or 15%, primarily due to shifts in spending by OEM partners.
Other revenue. Other revenue represented 2% of total revenue for each of the six months ended June 30, 2026 and 2025. Other revenue decreased $1.3 million or 19%.
Cost of revenue and operations. Cost of revenue and operations expense represented 17% of total revenue for each of the six months ended June 30, 2026 and 2025. Cost of revenue and operations was essentially flat period over period.
Product and technology. Product and technology expense represented 16% and 17% of total revenue for of the six months ended June 30, 2026 and 2025, respectively. Product and technology expense decreased $1.9 million or 3%, primarily due to lower compensation, partially offset by higher severance-related costs and third-party costs, including licenses.
Marketing and sales. Marketing and sales expense represented 34% of total revenue for each of the six months ended June 30, 2026 and 2025. Marketing and sales expense increased $1.9 million or 2%, primarily due to increased third-party costs, higher spend to build consumer awareness and more effectively capture high-intent demand, as well as elevated bad debt expense.
General and administrative. General and administrative expense represented 11% and 12% of total revenue for the six months ended June 30, 2026 and 2025, respectively. General and administrative expense decreased $2.6 million or 6%, primarily due to a reduction in costs as a result of the conclusion of the D2C Media earnout period and lower compensation, partially offset by higher severance-related costs and third-party costs. For more information on the D2C Media earnout, see the "Liquidity and Capital Resources" section below.
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Depreciation and amortization. Depreciation and amortization expense decreased $17.9 million or 34%, primarily due to certain intangible assets being fully amortized as compared to the prior-year period and the accelerated depreciation associated with our amended headquarters office lease in the prior-year period.
Interest expense, net. Interest expense, net decreased $0.7 million or 4%, primarily due to a reduction in total indebtedness compared to the prior-year period and lower interest rates as well as higher interest income. For information related to our debt, see Note 5 (Debt) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.
Other (expense) income, net. Other (expense) income, net changed primarily due to unrealized losses on foreign currency denominated transactions.
Income tax expense. Income tax expense changed primarily due to increase in income before income taxes.
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Liquidity and Capital Resources
Overview. Our primary sources of liquidity are cash flows from operations, available cash reserves and borrowing capacity available under our Credit Agreement dated as of May 31, 2017, as amended from time to time ("Credit Agreement"). We believe our positive operating cash flow, along with our $350.0 million revolving loan due in 2029 ("Revolving Loan"), provide adequate liquidity to meet our business needs for the next twelve months and beyond, including those for investments, debt service, share repurchases and strategic acquisitions. However, our ability to maintain adequate liquidity in the future is dependent upon a number of factors, including our revenue, our ability to contain costs, including capital expenditures, and to collect accounts receivable and various other macroeconomic factors, many of which are beyond our direct control.
We may also seek to raise funds through debt or equity financing in the future to fund operations, significant investments or acquisitions that are consistent with our strategy. If we need to access the capital markets, there can be no assurance that financing may be available on attractive terms, if at all. As of June 30, 2026, Cash and cash equivalents were $33.3 million and including our undrawn Revolving Loan, our total liquidity was $333.3 million.
Indebtedness. As of June 30, 2026, the outstanding aggregate principal amount of our indebtedness was $450.0 million, at an average interest rate of 6.3%, including $400.0 million of outstanding aggregate principal under the 6.375% Senior Unsecured Notes due in 2028 and $50.0 million of outstanding principal under the Revolving Loan which had an interest rate of 5.8%. During the six months ended June 30, 2026, we made $5.0 million in cash payments on our Revolving Loan, and there were no additional borrowings. As of June 30, 2026, $300.0 million was available to borrow under the Revolving Loan.
As of June 30, 2026, we were in compliance with the covenants under our debt agreements. Our borrowings are limited primarily by: 1) Senior Secured Net Leverage Ratio (as defined in our Credit Agreement) not to exceed 3.5x; and 2) Consolidated Interest Coverage Ratio (as defined in our Credit Agreement) not to be below 3.0x. As of June 30, 2026, our Senior Secured Net Leverage Ratio was 0.08x and our Consolidated Interest Coverage Ratio was 7.20x. As of March 31, 2026, our Total Net Leverage Ratio (as defined in the Credit Agreement) was 1.95x. For further information, see Note 5 (Debt) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.
Share Repurchase Program. On February 27, 2025, we announced that our Board of Directors had authorized a three-year share repurchase program to acquire up to $250.0 million of our common stock. The repurchase program may be suspended or discontinued at any time and does not obligate us to repurchase any specific amount or number of shares. We may repurchase shares from time to time in open market transactions or through privately negotiated transactions in accordance with applicable federal securities laws and other applicable legal requirements, and subject to our blackout periods. We intend to fund the share repurchase program principally with cash from operations. During the six months ended June 30, 2026, we repurchased and subsequently retired 6.2 million shares for $57.3 million at an average price paid per share of $9.23.
Earnouts.
•As part of the D2C Media acquisition, we were required to pay additional cash consideration to certain former owners who are now employees of the Company based on the achievement of a revenue performance metric. The amount to be paid was determined by the acquired business’ achievement of certain revenue-related financial targets through December 31, 2025 and expensed over each performance period. In April 2026, we paid CAD$15.0 million (approximately USD$10.9 million) associated with the earnout for the year ended December 31, 2025, which was the final installment of the earnout.
•As part of the DealerClub acquisition, we may be required to pay additional performance-based consideration of up to $88.0 million, which may be paid in cash, or stock if mutually agreed upon, to certain former owners who are now employees of the Company. The amount to be paid will be determined by DealerClub's future achievement of certain revenue-related financial targets through December 31, 2028, and will be expensed over the relevant performance periods. Based on current performance trends, no such consideration was expensed during the six months ended June 30, 2026.
For information related to the earnouts, see Note 3 (Business Combinations) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q and Note 3 (Business Combinations) in Part II, Item 8., "Financial Statements and Supplementary Data", of our Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the SEC on February 26, 2026.
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Cash Flows. Details of our cash flows are as follows (in thousands):
Six Months Ended June 30,
2026 2025 Change
Net cash provided by (used in):
Operating activities $ 55,620 $ 55,683 $ (63 )
Investing activities (12,123 ) (29,124 ) 17,001
Financing activities (66,257 ) (49,343 ) (16,914 )
Effect of exchange rate changes on Cash and cash equivalents (189 ) (185 ) (4 )
Net change in Cash and cash equivalents $ (22,949 ) $ (22,969 ) $ 20
Operating Activities. Cash provided by operating activities for the six months ended June 30, 2026 decreased as compared to the six months ended June 30, 2025 primarily due to unfavorable working capital changes, partially offset by higher Net income and related adjustments in the Consolidated Statement of Cash Flows. For further information, see the Consolidated Statements of Cash Flows included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.
Investing Activities. The decrease in cash used in investing activities during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 was primarily due to the impact of the DealerClub acquisition, partially offset by the proceeds collected from the sale of the RepairPal equity investment, both of which occurred in the prior year period. For further information on these items, see Note 3 (Business Combinations) and Note 4 (RepairPal Equity Investment) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.
Financing Activities. During the six months ended June 30, 2026, cash used in financing activities was primarily related to repurchases of our common stock, debt repayments and tax payments made in connection with the vesting of certain equity awards. During the six months ended June 30, 2025, cash used in financing activities was primarily related to repurchases of our common stock, debt repayments and tax payments made in connection with the vesting of certain equity awards, partially offset by proceeds from Revolving Loan borrowings. For information related to our debt and repurchases of our common stock, see Note 5 (Debt) and Note 7 (Stockholders' Equity) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.
Commitments and Contingencies. For information related to commitments and contingencies, see Note 6 (Commitments and Contingencies) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.
Off-Balance Sheet Arrangements. We do not have any material off-balance sheet arrangements.
Critical Accounting Policies. For information related to critical accounting policies, see "Critical Accounting Policies and Estimates" in Part II, Item 7., "Management’s Discussion and Analysis of Financial Condition and Results of Operations", of our Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the SEC on February 26, 2026 and see Note 1 (Description of Business and Summary of Significant Accounting Policies) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q. During the six months ended June 30, 2026, there have been no changes to our critical accounting policies.
Recent Accounting Standards. For information related to recent accounting pronouncements, see Note 1 (Description of Business and Summary of Significant Accounting Policies) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.
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