Cars.com Inc. · NYSE:CARS
Cars.com — Q2 2019 Earnings Presentation
24 slides from Cars.com's earnings presentation, Aug 5, 2019
Slide 1: Second Quarter 2019 Earnings
Second Quarter 2019 Earnings August 5, 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 strate
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation discusses Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Net Income per Diluted Share and Free Cash Flow. These are not financial measures as defined by GAAP. These financial measures are presented as supplemental measures of oper
Slide 4: Executing on our strategy
Executing on our strategy Growth in Direct Completion of Consistent SEO Visits Marketplace Dealer Audience Growth Up 51% in Q2 Customers in Affiliate May & June Conversions OPERATIONAL EFFICIENCIES 4
Slide 5: Executing on our strategy: Consistent Audience Growth
Monthly Year-over-Year Traffic Growth 25% Executing on 20% our strategy: 15% Consistent Audience Growth 10% 5% Traffic (Visits) 0% Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 (5%) (10%) (15%) 5 5
Slide 6: Traffic Health and Diversity
75% Organic traffic Traffic Health 25% 25% and Diversity Paid Organic Sources of Traffic Direct Comprise 75% of Visits in Q2 Moble App SEO 21% 29% 6 6
Slide 7: Executing on our strategy: 51% growth in SEO visits in Q2
Daily CARS SEO entries and trendlines | Source: Adobe 2015 2016 2017 2018 2019 Executing on our strategy: 51% growth in SEO visits in Q2 7 7
Slide 8: Executing on our Strategy: SEO Strength Continues
Share of Voice1 | Source: SEMRush Executing on our Strategy: SEO Strength Continues SEO Average Ranking Position2 | Source: SEMRush We are a leader in SEO among third-party automotive sites 1 Rank within Google’s top 100 results for 4,000 of the top volume keywords for our competitive set. 2 Average
Slide 9: Initiatives to Grow Dealer Customers
Initiatives to Grow Dealer Customers 1 2 3 MORE EFFECTIVE TRAFFIC & PRODUCT SALES LEAD GROWTH INNOVATION STRUCTURE 9
Slide 10: Marketing Investments to Grow Traffic & Leads
Initiatives to Grow Dealer Customers: Marketing Investments to Grow Traffic & Leads Incremental marketing spend and reallocation of resources, focused on value delivery +15% +16% +9% 2018 2019 2018 2019 2018 2019 Q2 Spend Q2 Visits Q2 Leads 10
Slide 11: Executing on our Strategy: Growth in Direct Marketplace Dealer Customers
Executing on our Strategy: Growth in Sales Direct Cancels Net Marketplace Dealer Customers Realizing significant improvements in retention during Q2 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 11 11
Slide 12: Executing on our Strategy: Completion of Affiliate Conversions
Executing on our Strategy: $50+ Completion of Affiliate Conversions MILLION of annualized Gannett & TEGNA markets convert a year ahead of schedule FCF uplift beginning 2H 2020 Dallas market 8 markets DC market 245 dealers* (incl. LA, Chicago) Full Control Achieved 2017 2018 2019 2020 6/1/17 Spin-off
Slide 13: National Advertising – Our turnaround plan
National Advertising – Our turnaround plan 1 2 3 Compete with High-Impact Lead with Diversify with Formats & Integrated Audience Data Insights & Data Products Solutions 13
Slide 14: Operating Efficiencies
Operating Efficiencies Implemented across the business Sales Tech Other transformation transformation efficiencies 14
Slide 15: Q2 2019 Financial Highlights
($ in millions, except per share data) 2019 2018 Revenues $148.2 $168.5 Total Operating Expenses $147.2 $144.0 Q2 2019 Net (Loss)/Income ($6.0) $12.7 Financial (Loss)/Earnings per Diluted Share ($0.09) $0.18 Highlights Adjusted Net Income $20.0 $34.3 Adjusted Net Income per Diluted Share $0.30 $0.48
Slide 16: Q2 2019 Key Operating Metrics
Average Monthly Unique Visitors + 13% YOY Traffic (Visits) + 16% YOY Q2 2019 Mobile Traffic1 71% Key Operating Direct Monthly ARPD2 $2,163 Metrics Dealer Customers 18,891 - Direct Dealer Customers 15,939 - Affiliate Dealer Customers 2,952 1 Mobile traffic includes mobile browser, mobile app and tabl
Slide 17: June 30, 2019 Balance Sheet, Cash Flow & Capitalization
Cash Flows from Operating Activities $50.8 million Free Cash Flow $41.4 million June 30, 2019 Cash $9.5 million Balance Sheet, Debt $680.0 million Cash Flow & Net Leverage Ratio 1 3.25x Capitalization Shares Outstanding 2 66.7 million Enterprise Value 3 $1.9 billion 1 Net Leverage Ratio calculated i
Slide 18: Outlook
2019 Revenue growth ~ (6%) to (9%) Outlook Adjusted EBITDA margin ~ 27% to 29% Note: This outlook is forward looking and actual results may differ materially from those presented here. 18
Slide 19: 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 20: Questions
Questions 20
Slide 21: Appendix
Appendix 21
Slide 22: 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 Affiliate Markets 15% Operating Future Increase/ retail rates. Upo
Slide 23: Non-GAAP Reconciliations
Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Reconciliation of Net (loss) income to Adjusted EBITDA Net (loss) income $ (6,026) $ 12,726 $ (15,057) $ 13,655 Interest expense, net 7,711 7,343 15,277 13,300 Non-GAAP Income tax (benefit) expense Depreciation and amortizatio
Slide 24: 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