Online new and used car marketplace Cars.com (NYSE:CARS) missed analysts' expectations in Q2 CY2024, with revenue up 6.4% year on year to $178.9 million. Next quarter's revenue guidance of $179.5 million also underwhelmed, coming in 3.4% below analysts' estimates. It made a GAAP profit of $0.17 per share, down from its profit of $1.37 per share in the same quarter last year.
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Cars.com (CARS) Q2 CY2024 Highlights:
Revenue: $178.9 million vs analyst estimates of $181.8 million (1.6% miss)
EPS: $0.17 vs analyst estimates of $0.11 ($0.06 beat)
Revenue Guidance for Q3 CY2024 is $179.5 million at the midpoint, below analyst estimates of $185.9 million
EBITDA Margin: 28.2%, up from 27.1% in the same quarter last year
Free Cash Flow of $28.99 million, similar to the previous quarter
Dealer Customers: 19,390, up 605 year on year
Market Capitalization: $1.18 billion
"We drove disciplined growth and strong profitability during the second quarter on top of returning to sequential expansion in our dealer customer base," said Alex Vetter, Chief Executive Officer of Cars Commerce.
Originally started as a joint venture between several media companies including The Washington Post and The New York Times, Cars.com (NYSE:CARS) is a digital marketplace that connects new and used car buyers and sellers.
Online Marketplace
Marketplaces have existed for centuries. Where once it was a main street in a small town or a mall in the suburbs, sellers benefitted from proximity to one another because they could draw customers by offering convenience and selection. Today, a myriad of online marketplaces fulfill that same role, aggregating large customer bases, which attracts commission-paying sellers, generating flywheel scale effects that feed back into further customer acquisition.
Sales Growth
Cars.com's revenue growth over the last three years has been unimpressive, averaging 5.6% annually. This quarter, Cars.com reported mediocre 6.4% year-on-year revenue growth, missing Wall Street's expectations.
Guidance for the next quarter indicates Cars.com is expecting revenue to grow 3% year on year to $179.5 million, slowing from the 5.9% year-on-year increase it recorded in the comparable quarter last year. Ahead of the earnings results, analysts were projecting sales to grow 6.1% over the next 12 months.