Cars.com Inc. (CARS) Tops Q4 EPS by 26c; Issues Mixed Outlook

Cars.com Inc. (NYSE: CARS) reported Q4 EPS of $0.63, $0.26 better than the analyst estimate of $0.37. Revenue for the quarter came in at $152.2 million versus the consensus estimate of $152.9 million.

"We exited 2019 with momentum and fundamental strength. We increased dealer count by nearly 200 customers in the fourth quarter, delivered strong cash flow and performance in line with expectations, and accelerated category-leading traffic gains. Despite entering 2020 with a lower dealer base, by mid-year we will have completely re-architected the business in the three years since going public: we turned around SEO and reestablished our leadership in traffic, we stabilized our dealer base, we transformed our go-to market strategy and we are set to have fully completed the conversion of our affiliate channel and the technology transformation mid-year 2020. These accomplishments position us to realize the full benefits from our shift to an online marketplace with an integrated solutions strategy and the value of our GM agreements, both of which we expect to contribute to strong growth in the second half of 2020 and beyond," said Alex Vetter, President and Chief Executive Officer of CARS.

GUIDANCE:

For 2020, the Company expects a sequential build of quarterly dealer revenue yielding revenue ranging from a year over year decline of 4% to flat for the full year and a positive year-over-year growth rate to exit the year. The first half of 2020 is expected to be negatively impacted by 1,087 fewer dealers than the prior year, but in the second half of 2020 the Company will benefit from the sequential subscription revenue build as well as growth in ARPD from the rollout of the GM websites and the launch of the new in-market video offering, FUELTM.

The Company expects Adjusted EBITDA margins between 25 and 27% for full year 2020, and EBITDA growth by the fourth quarter of 2020. The first half of 2020 will be impacted by the costs to develop and serve the new GM website customers in advance of the revenue build, as well as lower year-over-year dealer customers at the start of 2020 compared to 2019. In the second half of 2020 the Company will benefit from the sequential subscription revenue build as well as the completion of the affiliate revenue share payments on June 30, 2020. The Company expects Free Cash Flow to be flat to up 25% in 2020 driven by the completion of the affiliate revenue share payments mid-year associated with the early conversion of the affiliate markets.

For earnings history and earnings-related data on Cars.com Inc. (CARS) click here.

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