Cars.com’s third quarter was characterized by steady execution and positive customer momentum, with the market responding positively to the company’s results. Management pointed to the success of its dealer-focused initiatives, particularly the adoption of new marketplace packages and growth in dealer count, as key contributors. CEO Alex Vetter highlighted the company’s differentiated consumer audience and product suite, noting that “dealers consistently cite our unique consumer audience, data insights and differentiated product suite as key factors that are motivating them to join our platform.” The quarter also benefited from improvements in cost management and further adoption of AI-driven tools, which increased engagement among both consumers and dealers.
Is now the time to buy CARS? Find out in our full research report (it’s free for active Edge members).
Cars.com (CARS) Q3 CY2025 Highlights:
- Revenue: $181.6 million vs analyst estimates of $181.4 million (1.1% year-on-year growth, in line)
- Adjusted EPS: $0.48 vs analyst estimates of $0.49 (in line)
- Adjusted EBITDA: $54.63 million vs analyst estimates of $53.51 million (30.1% margin, 2.1% beat)
- Operating Margin: 9.3%, up from 6.4% in the same quarter last year
- Dealer Customers: 19,526, up 271 year on year
- Market Capitalization: $695 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Cars.com’s Q3 Earnings Call
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Thomas White (D.A. Davidson) asked about the drivers behind dealer revenue growth and new dealer additions. CEO Alex Vetter explained that dealers are seeking more effective sources of in-market demand and are attracted by Cars.com’s audience and new AI-powered features.
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Gary Prestopino (Barrington) inquired about the impact of product repackaging on ARPD and the adoption trajectory of AccuTrade and DealerClub. CFO Sonia Jain noted that multi-product adoption lifts ARPD by up to 3x, and both AccuTrade and DealerClub are seeing durable dealer engagement.
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Rajat Gupta (JPMorgan Chase) questioned changes in the competitive landscape and the impact of tariffs on franchise dealer churn. Vetter responded that Cars.com’s upmarket dealer and consumer base insulates it from lower-end pressures, and the platform’s organic traffic gives it an edge over competitors.
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Marvin Fong (BTIG) sought clarity on the pace of AccuTrade’s dealer additions and the influence of AI-driven features on user engagement. Vetter confirmed steady dealer pipeline growth, especially with large enterprise deals, and highlighted that Carson users demonstrate higher engagement and conversion.
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Joseph Spak (UBS) asked about the drivers behind achieving the upper end of EBITDA guidance and the strategic implications of AI data sharing with large language models. Jain stated that episodic OEM/national revenue would be needed to hit the top end, while Vetter emphasized the brand benefits from AI-driven content authority.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will closely monitor (1) the pace of dealer subscription growth and further adoption of Premium and Premium Plus packages, (2) the rollout and impact of AI-driven features like Carson in the mobile app, and (3) trends in OEM and national advertising spending as automaker marketing budgets adjust. Progress on cross-selling and ARPD growth will also be important markers for Cars.com’s execution.
Cars.com currently trades at $11.62, up from $10.38 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free for active Edge members).
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