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Online new and used car marketplace Cars.com (NYSE:CARS) fell short of the market’s revenue expectations in Q1 CY2025, with sales flat year on year at $179 million. Its non-GAAP profit of $0.37 per share was 24.7% below analysts’ consensus estimates.
Is now the time to buy CARS? Find out in our full research report (it’s free).
Cars.com’s first quarter was shaped by shifting industry conditions and the company’s efforts to strengthen its marketplace and solutions portfolio. CEO Alex Vetter noted that “our platform strategy, which combines the leading and scaled consumer marketplace with dealer software tools, has been key to our diversified growth.” Management highlighted gains in dealer count, robust consumer traffic—reaching a record 29 million monthly unique visitors—and expanding adoption of tools like AccuTrade and Dealer Club. CFO Sonia Jain pointed out that cost controls and operational discipline helped adjusted EBITDA margin exceed expectations despite flat year-over-year revenue.
Looking ahead, Cars.com is prioritizing product adoption and platform enhancements to capitalize on growing consumer interest and evolving dealer needs. Management suspended full-year revenue guidance due to uncertain OEM media spend, citing ongoing tariff-driven volatility. Vetter explained, “the signals that we’re getting give us less certainty on their commitment.” The company remains focused on growth initiatives such as further integration of AccuTrade and Dealer Club, website product expansion, and delivering value through data-driven marketplace improvements. Jain added, “we expect Q2 revenue to be up year over year and quarter over quarter,” but cautioned that visibility into the timing and magnitude of advertising spend is limited.
Management attributed first quarter outcomes to strong consumer engagement, new product adoption by dealers, and disciplined cost management, while acknowledging near-term challenges from evolving OEM and dealer media spending.
Management expects future results to be driven by the pace of product adoption, consumer engagement trends, and the timing of OEM and dealer advertising decisions.
In the coming quarters, the StockStory team will focus on (1) the pace of product adoption in AccuTrade and Dealer Club, (2) stabilization or growth in OEM and dealer media commitments as tariff-driven uncertainty evolves, and (3) continued consumer engagement metrics such as unique visitor growth. Progress on operational efficiency and successful renegotiation of website agreements will also be key indicators.
Cars.com currently trades at a forward EV/EBITDA ratio of 3.1×. At this valuation, is it a buy or sell post earnings? Find out in our full research report (it’s free).
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