What Cars.com (CARS) Said on Its Q3 Earnings Call

Key Points

• Cars.com’s third-quarter profit more than doubled to $16.3 million, while revenue edged up to $181.9 million and adjusted EBITDA rose 2% to $55.8 million. Marketplace revenue grew 5%, helping offset weakness in dealer solutions and advertising.
• The company launched a free, self-service package for smaller independent dealers, attracting nearly 400 signups; it also reported nearly double-digit growth in leads and more than 1 million monthly users of its Carson AI shopping assistant.
• Cars.com reaffirmed its full-year outlook for flat-to-2% revenue growth and a 29%–30% adjusted EBITDA margin, expecting revenue near the low end and margin near the high end of those ranges. It repurchased $74 million of shares through Q3 and remains on pace for its $90 million annual buyback target.

Cars.com NYSE: CARS reported higher third-quarter profit and reaffirmed its 2026 outlook, as growth in its core marketplace business helped offset weakness in dealer solutions and advertising revenue.

Revenue rose slightly year over year to $181.9 million, while net income more than doubled to $16.3 million, or $0.30 per diluted share, from $7.7 million, or $0.12 per share, a year earlier. Adjusted EBITDA rose 2% to $55.8 million, with a margin of 30.7%, exceeding the high end of the company’s guidance by 120 basis points.

CEO Tobi Hartmann said marketplace revenue grew 5% year over year in the quarter. The company’s focus on that business has helped improve its financial performance, though he cautioned that websites and trade and appraisal products face near-term headwinds as their roadmaps are reshaped.

Marketplace growth and a free dealer offering

Cars.com launched a self-service Marketplace Starter package aimed at smaller independent dealers, with no upfront fee. Hartmann said nearly 400 dealers had signed up and approximately 80% of their vehicle inventory was priced below $20,000. More than 60% of eligible signups were fully self-service.

Hartmann said the offering is intended to address a gap in affordable inventory and attract dealers to the marketplace. The free package has limits, including on leads, and the company is considering additional services and upgrade options.

CFO Sonia Jain said starter-package dealers were not included in the company’s third-quarter dealer count and did not affect its average revenue per dealer, or ARPD. Over time, she said, the offering would likely dilute ARPD once a conversion feature is built, but its primary goal is to bring more attractive listings onto the platform.

Jain said the company’s dealer base is roughly two-thirds franchise dealers and one-third independent dealers, representing an estimated 20% to 25% penetration among independents. Across paid subscriptions and free starter packages, Cars.com added close to 600 independent dealers year over year.

Third-quarter ARPD rose 3% to $2,532, driven largely by adoption of higher-tier marketplace subscriptions. Premium+ adoption exceeded 12% of the subscription mix, compared with the company’s goal of 15% by year-end.

Traffic, AI and website investments

Hartmann said the company’s Carson AI shopping assistant surpassed 1 million monthly users during the quarter, nearly double its user base a year earlier. Cars.com is also working on an integration with Muse to surface listings and dealers to more users.

Marketplace traffic and visitors fell by a mid-single-digit percentage year over year, a smaller decline than in the first half. Hartmann said the company has prioritized high-intent shoppers and lead conversion over traffic volume, with lead performance rising nearly double digits year over year. Organic traffic also grew.

Cars.com plans to add AI-generated vehicle videos and shopper tools, including search, recommendations and vehicle-detail summaries, to Dealer Inspire websites in the fourth quarter. Jain said consolidated dealer count declined year over year because of lower website subscriptions.

Hartmann said the company is seeking to stabilize website development and improve its growth outlook in 2027. He also said Cars.com does not view buying and selling vehicles itself as core to its strategy, instead positioning the platform as a partner that facilitates customers’ transactions.

Costs, capital returns and outlook

Third-quarter operating expenses fell 7% year over year to $153 million. Jain said roughly half the improvement came from lower costs and efficiencies, while the rest reflected lower depreciation and amortization after customer lists tied to the company’s 2017 spin-off were fully amortized. Hartmann said organizational and cost-containment efforts generated $30 million to $35 million in discrete annualized operating cost savings.

Free cash flow for the first nine months was $97.3 million, up from $94.5 million a year earlier. Cars.com repurchased 7.6 million shares for $74 million through the third quarter and said it remained on pace for its $90 million full-year buyback target. Debt stood at $445 million at September 30, with liquidity of $369.6 million.

The company reaffirmed its full-year forecast for revenue growth of flat to 2% and an adjusted EBITDA margin of 29% to 30%. Jain said revenue is expected toward the lower end of the range and the margin toward the higher end. OEM and national revenue fell 3% year over year in the third quarter but rose 15% from the second quarter; Jain said discussions with automakers about 2027 spending have been positive.

Hartmann also welcomed Trent Ziegler as the company’s new CFO and Mausam Bhatt as chief product officer. Jain will remain for a period to help with the CFO transition, Hartmann said.

About Cars.com (NYSE:CARS)

Cars.com Inc NYSE: CARS operates a digital automotive marketplace that connects consumers with automotive dealers and manufacturers. Its platform enables shoppers to research vehicles, compare listings, read reviews, obtain financing information and connect with sellers when buying new or used cars.

The company provides automotive retailers with digital marketing, advertising, inventory merchandising, website and digital retailing solutions, as well as data and analytics tools. Its portfolio includes the Cars.com marketplace and related brands and services focused on dealer reviews, vehicle financing, automotive content and customer engagement.

Cars.com primarily serves the United States automotive market, working with consumers, franchised and independent dealerships, original equipment manufacturers and other industry participants.

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