Cars.com Inc. · NYSE:CARS
Cars.com — Q1 2019 Earnings Presentation
22 slides from Cars.com's earnings presentation, May 10, 2019
Slide 1: First Quarter 2019 Earnings
First Quarter 2019 Earnings May 10, 2019
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the federal securities laws. All statements other than statements of historical facts are forward- looking statements. Forward-looking statements include information concerning our business strat
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation discusses Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Free Cash Flow. These are not financial measures as defined by GAAP. These financial measures are presented as supplemental measures of operating performance because we believe th
Slide 4: Executing on our strategy
Executing on our strategy Record Brand Record Lead SEO Visits Consistent Awareness in Volume Up 49% in Q1 Audience Growth March of 73% OPERATIONAL EFFICIENCIES 4
Slide 5: Primary Initiatives to Grow Dealer Count
Primary Initiatives to Grow Dealer Count 1 2 3 MORE EFFECTIVE TRAFFIC & PRODUCT SALES LEAD GROWTH INNOVATION STRUCTURE 5
Slide 6: Traffic growth accelerating, leading to share gains
Traffic growth 50 45 accelerating, 40 leading to share 35 gains 30 25 Traffic (Visits) (Traffic (Visits), in millions) 20 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2019 2018 2017 Note: Automotive traffic is subject to seasonal fluctuations with higher traffic volumes being typically generated
Slide 7: Our Leading Brand is Stronger Than Ever
Our Leading Brand is Stronger Than Ever In March, brand awareness reached an all-time high of 73% Targeting events that… …lead to record awareness MARCH 2019 TOTAL BRAND AWARENESS Cars.com Cars.com 73% Autotrader 63% KBB 57% True Car 39% CarGurus Edmunds 37% 33% #1 in Brand Awareness1 0% 20% 40% 60%
Slide 8: SEO Visits Grow 49% in Q1
SEO Share of Voice1 | 2019 Source: SEMRush SEO Visits Grow 49% in Q1 Cars.com disciplined approach to SEO prevailing • Constant focus on the user • Industry-leading content SEO Average Ranking Position2 | 2019 Source: SEMRush • Continual focus on speed • Quality links driving users to our site • 100
Slide 9: Dealer Retention – Growth in Traffic and Leads
Total Lead Growth Dealer Retention – +15% Growth in Traffic and Leads • Record number of leads to dealers • Exceeded Q1 targets • Lead quality scores also rise Q1’18 Q1’19 9 9
Slide 10: Dealer Retention – Lead Quality
Dealer Retention – Lead Quality Improving lead quality drives dealer retention by maximizing gross profit for dealer customers DrivenData The only automated solution allowing dealers to Third party analysis of dealer DMS and marketplace auto-populate features and options in their partnerships shows
Slide 11: Leads are only part of the story
Leads are only part of the story. What are the shoppers doing who don’t show up in the CRM? ROXANNE 4X +5 37% more likely to more likely buy a vehicle look at 5 to return for from that dealer more VDPs a second visit Dealer Inspire Case Study (141 million site visits analyzed across Cars.com, Dealer
Slide 12: Building Blocks for Our Future
Building Blocks for Our Future 1 2 3 4 Leveraging Developing New Industry-Leading Full Conversion Best-in-Class Brand & Solutions that Help Sales & Technology & Control of Marketing Expertise Dealers Sell Cars Capabilities Affiliate Markets SUSTAINABLE MARKET LEADERSHIP REVENUE & ADJUSTED EBITDA GRO
Slide 13: Q1 2019 Financial Highlights
($ in millions, except per share data) 2019 2018 Revenues $154.2 $160.0 Total Operating Expenses $158.3 $152.8 Q1 2019 Net (Loss)/Income ($9.0) $0.9 Financial (Loss)/Earnings per Diluted Share ($0.13) $0.01 Highlights Adjusted Net Income $20.7 $28.5 Adjusted Net Income per Diluted Share $0.31 $0.39
Slide 14: Q1 2019 Key Operating Metrics
Average Monthly Unique Visitors + 16% YOY Q1 2019 Traffic (Visits) + 17% YOY Key Operating Mobile Traffic1 71% Direct Monthly ARPD2 Metrics $2,225 Dealer Customers 19,300 - Direct Dealer Customers 16,246 - Affiliate Dealer Customers 3,054 1 Mobile traffic includes mobile browser, mobile app and tabl
Slide 15: March 31, 2019 Balance Sheet, Cash Flow & Capitalization
Cash Flows from Operating Activities $38.4 million March 31, 2019 Free Cash Flow $35.0 million Balance Sheet, Cash $28.3 million Cash Flow & Debt $685.6 million Capitalization Net Leverage Ratio 1 3.0x Shares Outstanding 2 66.6 million Enterprise Value 3 $2.1 billion 1 Net Leverage Ratio calculated
Slide 16: 2019 Outlook
2019 Outlook Revenue growth -5 to +2% Adjusted EBITDA margin 30 - 31% Note: This outlook is forward looking and actual results may differ materially from those presented here. 16
Slide 17: T.A.P.S.
T.A.P.S. Supporting families grieving a military loss www.cars.com/taps/ 17
Slide 18: Questions
Questions 18
Slide 19: Appendix
Appendix 19
Slide 20: Affiliate Conversions: Illustrative
Affiliate Conversions: Illustrative $25 million Increase in Revenues, $30+ million Increase in Adjusted EBITDA, $50+ million Increase in FCF Unaudited Adjustments Conversion of Changes in (a) Affiliates are currently billed at 60% of retail Affiliate Markets 15% Operating Future Increase/ rates. Upo
Slide 21: Non-GAAP Reconciliations
Three Months Ended March 31, 2019 2018 Reconciliation of Net (loss) income to Adjusted EBITDA Net (loss) income $ (9,031) $ 929 Interest expense, net 7,566 5,957 Non-GAAP Income tax (benefit) expense (2,470) 264 Depreciation and amortization 28,125 23,938 Stock-based compensation expense 3,099 1,600
Slide 22: Definitions
Definitions Traffic (Visits). Traffic is critical to our business. Traffic to the Cars.com network of websites and mobile apps provides value to our advertisers in terms of audience, awareness, consideration and conversion. In addition to tracking traffic volume and sources, we monitor activity on o