Cars.com NYSE: CARS executives used the company’s fourth-quarter and full-year 2025 earnings call to outline a strategic pivot toward strengthening its marketplace “flywheel,” while also providing guidance that reflects continued dealer revenue gains offset by ongoing volatility in OEM and national advertising.
CEO Toby Hartmann, who said this was his first earnings call with the company, credited the prior leadership for transforming Cars.com from print classified origins into a technology platform with marketplace and appraisal capabilities. Hartmann said he is now focused on sharpening core marketplace fundamentals—inventory, brand trust, interconnected products, and proprietary data—while improving product integration, processes, cost structure, and organizational efficiency. He described Cars.com as having “good assets” that have been “rather isolated and disconnected,” and said scaling them will require better integration and simplified operations.
Full-year 2025 results: modest growth, steady profitability and cash flow
CFO Sonia Jain said Cars.com delivered total revenue of $723 million in 2025, up 1% year over year, with low single-digit growth in the second half. Jain attributed improving results to a combination of volume and pricing levers that strengthened throughout the year.
- Dealer customers: 19,544 at the end of Q4, up 338 year over year.
- Adjusted EBITDA margin: 29.2% for the full year.
- Free cash flow: $126 million, supported by roughly 60% adjusted EBITDA to free cash flow conversion.
- Share repurchases: $86 million in 2025, representing about 9% of the outstanding share count retired, according to management.
Net income for 2025 was $20.1 million, or $0.32 per diluted share, compared with $48.2 million, or $0.72 per diluted share, a year earlier. Jain said the year-over-year differences reflected items including a prior-year gain on the sale of an equity investment and changes in the fair value of contingent consideration recorded in 2024. Adjusted net income was $108.1 million, or $1.71 per diluted share, compared with $114.9 million, also $1.71 per diluted share, in the prior year.
Q4 showed dealer revenue gains; OEM advertising remained episodic
Fourth-quarter revenue was $183.9 million, up 2% year over year and in line with guidance. Dealer revenue increased 3% year over year, which Jain characterized as a continued improvement from Q3. Dealer count and product repackaging contributed positively in the quarter.
Jain said marketplace momentum remained an important theme. Cars.com added more than 100 marketplace dealers sequentially for the third straight quarter, reversing historical seasonality in Q4. Total dealer customer growth was muted to a net increase of 18 units quarter over quarter due to elevated website cancellations, partially offsetting marketplace performance.
Average revenue per dealer (ARPD) was $2,472 in Q4, up slightly from Q3 and flat year over year. Jain said new Premium and Premium+ marketplace tiers rolled out mid-year aligned pricing to product value and that Premium+ subscribers more than doubled from Q3 to Q4. She also noted that softer uptake of dealer media products offset some monetization improvements elsewhere, and management expects ARPD to improve through cross-selling, upgrades, and pricing/packaging levers.
OEM and national revenue declined by roughly $1.5 million year over year in Q4, despite the company’s prior expectation for growth. Jain said a weak October created a gap that weighed on the quarter, while November and December rebounded to be essentially flat versus the same months in 2024. She pointed to the “episodic nature” of OEM media investments and said the company is prioritizing “stickier” recurring dealer products.
Product updates: AI tools, marketplace engagement, and dealer workflow integration
Management highlighted several product and engagement metrics tied to the marketplace. Jain said Cars.com attracted 627 million visits from nearly 26 million average monthly unique visitors in 2025, with organic traffic at nearly 60% of total visits. She also said Cars.com continues to be the “number 1 most cited public automotive marketplace” across certain AI services, including Google AI Overviews and ChatGPT.
Jain discussed “Carson,” an AI-powered search assistant, saying it is driving higher engagement by prompting four times more saved vehicles and three times more vehicle listing views among users. She also highlighted Market Area Expansion, which helps dealers extend inventory reach beyond local markets, and cited survey data indicating 80% of recent car buyers are willing to purchase the right vehicle even if it is outside their market.
On the dealer tools side, Jain said AccuTrade ended Q4 with roughly 1,180 subscribers, and that the average number of vehicles appraised per customer increased 15% quarter over quarter. She also said the company launched AccuTrade IMS, described as a full lifecycle inventory management system intended to be fully integrated with the Cars.com marketplace and dealer websites.
Hartmann expanded on the integration focus, describing a future in which dealers can more seamlessly activate tools like AccuTrade as part of a marketplace subscription experience rather than managing multiple standalone solutions. He said integrated products should make adoption easier for dealers and enable stronger attribution modeling and data-driven insights.
Management also referenced an AI-Powered Inventory Video tool that can generate video assets from vehicle listings. Hartmann said early results show a two-times lift in website lead conversion for those AI videos versus other media tactics.
Costs, capital returns, and 2026 outlook
Operating expenses were $162.2 million in Q4, up 1% year over year, largely due to marketing investments and severance and stock-based compensation, partially offset by lower depreciation and amortization. Adjusted operating expenses were $145.5 million, down 3% year over year in Q4. Adjusted EBITDA was $55 million in Q4, flat year over year, with adjusted EBITDA margin of 29.9%, down 90 basis points due to marketing investments.
For 2026, management guided to revenue flat to up 2% year over year, with Q1 revenue expected to be flat to up 1%. Jain said dealer revenue is expected to continue growing year over year, supported by marketplace and website repackaging, customer base growth, and product adoption, while OEM and national revenue is expected to be pressured and is anticipated to be “flat to down” for the year.
Adjusted EBITDA margin for 2026 is expected to be 29% to 30%, with absolute adjusted EBITDA dollars expected to grow year over year. For Q1, adjusted EBITDA margin is expected to be 26% to 27%, reflecting a lower mix of OEM and national revenue and “slightly elevated” technology and compensation expenses. Jain also said DealerClub is expected to generate EBITDA losses in 2026, with a more pronounced impact in Q1.
On capital allocation, Jain said the company expects to repurchase at least $60 million of shares in 2026, with flexibility to increase buybacks with excess free cash flow. She also said the company intends to begin paying down its revolver while maintaining a commitment to share repurchases. As of December 31, 2025, Cars.com had $455 million of debt outstanding, net leverage of 1.9x, and total liquidity of $351.2 million.
In the Q&A, Hartmann said the company does not plan to dial back marketing investments, but intends to refocus marketing around marketplace fundamentals. He also emphasized that integration work across systems, data, platforms, and processes will take time, but said the company’s ambition to lift growth is aimed at a short-to-medium-term timeframe—“rather 2 years out than 5 years.”
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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