Cars.com NYSE: CARS reported first-quarter 2026 revenue near the high end of its guidance range and said it is moving ahead with cost reductions, product integration and artificial intelligence initiatives aimed at strengthening its automotive marketplace.
On the company’s earnings call Thursday, Chief Executive Tobias Hartmann said Cars.com generated first-quarter revenue of $180.2 million, up 1% from a year earlier and marking the company’s third consecutive quarter of year-over-year growth. Adjusted EBITDA was $51 million, while adjusted EBITDA margin of 28.3% exceeded the company’s guidance by more than one percentage point.
“We delivered on our financial commitments,” Hartmann said, adding that free cash flow rose 42% year over year. He said the company has identified $25 million to $30 million in recurring annualized operating cost savings as part of efforts to reshape the organization into “more nimble, marketplace-focused teams.”
Marketplace Strategy Takes Priority
Hartmann said Cars.com is shifting away from operating its products as “distinct and loosely affiliated pillars” and toward “one interconnected marketplace-centric ecosystem.” The strategy is intended to bring together marketplace listings, dealer websites, appraisal capabilities, media products and first-party data in a more integrated offering for consumers, dealers and automakers.
For car shoppers, Hartmann said the company plans to emphasize relevant listings, trusted data insights and an AI-first user experience. For dealers and original equipment manufacturers, Cars.com plans to use its audience and retail signals across marketplace, websites and media to improve return on investment.
The company also discussed changes to its go-to-market structure. Hartmann said Cars.com has reorganized its sales team to reduce product-based silos and duplication and make the sales process simpler for dealers. He said new product bundles will package offerings based on integrated value delivery rather than a set of a la carte point solutions.
As an example, Hartmann said customers using both Accu-Trade and the Cars.com marketplace see inventory turns speed up by an average of six days. During the question-and-answer session, he said Cars.com is de-emphasizing Accu-Trade as a standalone product and instead working to make it part of an integrated marketplace experience.
AI Features and Dealer Tools Highlight Product Roadmap
Hartmann highlighted several product launches and AI-related initiatives from the first four months of the year. Cars.com has introduced Model Context Protocol integrations for agentic AI platforms, currently with ChatGPT, allowing consumers to browse marketplace inventory within a native large language model environment before submitting leads on Cars.com.
Hartmann said large language models still account for less than 1% of Cars.com traffic, but he said the company is positioning itself for growth as those platforms expand. He also said Cars.com’s brand and automotive data accumulated over more than 20 years remain important advantages as consumers move from broad research into deeper purchase-intent activity.
The company also discussed Conversational Carson, its shopping assistant. Hartmann said consumers were more than four times as likely to submit a lead after having a conversation with Carson. Cars.com also launched a dealer app in April, with early features including AI-generated summaries of performance metrics, lead follow-up alerts and pricing intelligence.
Hartmann said cross-pollination among products, including bringing Accu-Trade data into marketplace listings, will be an increasing focus in the second half of the year.
Dealer Revenue Grows, OEM Advertising Remains Soft
Chief Financial Officer Sonia Jain said dealer revenue growth in the quarter was driven by enhanced value delivery across websites and the marketplace, along with dealer count growth of 140 customers from a year earlier. Average revenue per dealer was $2,473, consistent both year over year and sequentially.
Jain said the company is seeing progress in marketplace packaging. Premium Plus, its top-tier marketplace offering, has grown to nearly 7% of subscribers, and Cars.com expects adoption to reach 15% of marketplace customers before year-end.
However, Jain said overall dealer count declined sequentially because of pressure in solutions, including websites and Accu-Trade. She said the website business has moved into a different phase of growth after prior gains from becoming a preferred OEM vendor. Going forward, Cars.com expects the business to be more focused on innovation, package value and average revenue per dealer rather than pure market share gains.
OEM and national revenue declined by $2 million year over year in the first quarter. Jain said OEM budgets remain in flux, with some manufacturers investing in vehicle incentives to offset tariffs rather than advertising. She said the company is “cautiously optimistic” that the second quarter represents a trough for OEM media and that sequential growth could resume in the second half of the year.
Costs Fall and Share Repurchase Target Rises
First-quarter operating expenses were $163.6 million, down 5% from a year earlier, primarily because of lower depreciation and amortization and more efficient marketing spend. Adjusted operating expenses were $145.9 million, down 6% year over year.
Net income was $5 million, or $0.08 per diluted share, compared with a net loss of $2 million, or $0.03 per diluted share, in the prior-year period. Adjusted net income was $26.7 million, or $0.45 per diluted share, compared with $24 million, or $0.37 per diluted share, a year earlier.
Cars.com generated $39.8 million in net cash provided by operating activities and $33.5 million in free cash flow during the quarter. The company repurchased 2.5 million shares for $20 million in the first quarter and, through April 30, had repurchased 3.8 million shares for $32.9 million.
Jain said Cars.com increased its 2026 share repurchase target by 50%, from $60 million to $90 million. Debt outstanding was $455 million as of March 31, with a net leverage ratio of 1.8 times. Total liquidity was $359.6 million.
Cars.com Reaffirms 2026 Outlook
For the second quarter, Cars.com expects revenue growth to be flat to up 2% year over year. Dealer revenue is expected to remain a growth driver, while OEM and national revenue is expected to face similar year-over-year pressure as in the first quarter.
The company expects second-quarter adjusted EBITDA margin of 28% to 29%, including a partial-quarter benefit from the April cost reduction program. Cars.com reaffirmed its full-year 2026 outlook for flat to 2% revenue growth and adjusted EBITDA margin of 29% to 30%.
Hartmann said the company is focusing less on traffic and unique visitors as standalone measures and more on lead generation and conversion. He said first-quarter traffic and unique visitors were pressured by a tough comparison with pull-forward tariff-related demand in the broader industry in 2025, but direct traffic conversion improved year over year and lead volume growth was robust.
About Cars.com NYSE: CARS
Cars.com operates as a leading online automotive marketplace in the United States, connecting car shoppers with new and used vehicle listings from dealerships and private sellers. The platform enables consumers to research makes and models, compare prices, read expert and user reviews, and access tools such as TrueCost to estimate ownership expenses over time. Through its website and mobile applications, Cars.com aims to simplify the car-buying process by aggregating detailed vehicle data, payment calculators, and dealership ratings into a single user-friendly experience.
On the dealer side, Cars.com provides a suite of marketing and lead-generation services designed to help automotive retailers reach potential buyers and manage their online presence.
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