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Introduction & Market Context
Cars.com Inc. (NYSE:CARS) presented its second quarter 2025 earnings on August 7, 2025, showcasing improved profitability and strategic growth initiatives after a challenging first quarter. The company’s stock was trading down 2.89% in premarket at $12.75, following a 3.96% gain the previous day, reflecting mixed investor sentiment about the results.
The Q2 presentation comes after a disappointing first quarter where the company missed earnings expectations, resulting in a significant stock drop. This quarter’s results suggest a stabilization in the company’s core business and growing confidence in its strategic direction.
Quarterly Performance Highlights
Cars.com reported Q2 2025 revenue of $178.7 million, a slight increase from $178.4 million in Q2 2024. The company achieved an Adjusted EBITDA of $51 million, up from $50 million in the same period last year, with the Adjusted EBITDA margin improving to 28.5% from 28.2%.
As shown in the following chart of key performance metrics:
The company significantly increased its share repurchase program to $23 million in Q2 2025, up from just $5 million in Q2 2024. This aggressive buyback strategy resulted in 3.7 million shares repurchased in the first half of 2025, signaling management’s confidence in the company’s valuation and future prospects.
Traffic to Cars.com platforms reached record levels for a second quarter, with 162 million total visits and 26.6 million average monthly unique visitors. The company also reported growth in its dealer customer base to 19,412, representing an increase of approximately 160 dealers quarter-over-quarter.
Strategic Growth Initiatives
Cars.com highlighted several strategic initiatives driving its growth, including AI-powered search capabilities, AccuTrade expansion, and integration of its dealer platforms.
The company’s AI-powered search functionality is yielding impressive results, with 2x higher lead submission rates compared to standard keyword searches. Nearly 20% of internet leads now originate from this new search capability, with plans to further integrate editorial content into search results.
As illustrated in the following image of the AI-powered search interface:
The AccuTrade platform continues to gain traction, with the subscriber base growing to nearly 1,070 customers in Q2. The company secured an enterprise deal with a leading independent dealer group that will deploy AccuTrade into approximately 150 stores over fiscal year 2025. AccuTrade powered nearly 925,000 appraisals in Q2, representing a 14% increase quarter-over-quarter and 45% year-over-year.
The company’s dealer websites business maintained steady growth, reaching approximately 7,800 total websites with 50 new subscribers added in Q2. Cars.com completed an additional repackaging agreement during the quarter, with more negotiations expected to close by year-end.
Financial Analysis
Revenue performance remained steady in Q2, with OEM and National revenue increasing 5% year-over-year while dealer revenue declined 1%. The company noted that approximately half of OEM customers increased their marketing and advertising investments in Cars.com products during the quarter.
Cars.com demonstrated disciplined cost management, with Q2 adjusted operating expenses (including depreciation and amortization) down 2% year-over-year. This reflects streamlined costs and headcount, partially offset by marketing investments and DealerClub-related operating costs.
Adjusted EBITDA performance showed improvement, with the Q2 margin of 28.5% reaching the high end of the company’s guidance range of 27% to 29%. This represents a continuation of the company’s focus on profitability amid market challenges.
Free cash flow for the first half of 2025 was $42 million, down from $56 million in the first half of 2024. However, share repurchases increased significantly to $45 million in H1 2025, compared to $14 million in H1 2024, demonstrating the company’s commitment to returning capital to shareholders.
Forward-Looking Statements
Cars.com provided an optimistic outlook for the remainder of 2025, projecting low single-digit year-over-year revenue growth for the second half of the year. For the full year 2025, the company expects an Adjusted EBITDA margin of 29% to 31%, and has increased its share repurchase target to $70-$90 million.
This guidance represents a more confident stance compared to the first quarter, when the company suspended full-year revenue guidance due to market uncertainties. The improved outlook suggests management sees stabilization in the automotive market and growing momentum in the company’s strategic initiatives.
Conclusion
Cars.com’s Q2 2025 presentation depicts a company regaining its footing after a challenging first quarter. The improved profitability metrics, record traffic levels, and increased dealer count indicate resilience in the core business, while strategic investments in AI, AccuTrade, and dealer platforms position the company for future growth.
The significant increase in share repurchases further signals management’s confidence in the company’s valuation and prospects. However, investors should note that while metrics are improving, the company still faces challenges in a competitive automotive digital marketplace, with dealer revenue slightly declining year-over-year.
As Cars.com continues to execute on its strategic initiatives and navigate market uncertainties, the company’s ability to maintain its improved profitability while driving revenue growth will be key factors for investors to monitor in the coming quarters.
Full presentation:
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