Q2 2026 Cars.com Inc Earnings Call

August 6, 2026

Speaker #1: Good morning, and welcome to our second quarter 2026 earnings conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session.

Operator: Good morning, welcome to the Cars' Q2 2026 Earnings Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. Please be advised that this call is being recorded today, 7 August 2026. I would now like to turn the conference over to Katherine Chen, Vice President of Investor Relations. Please go ahead.

Speaker #1: If at any time during this call you require immediate assistance, please press *0 for the operator. Please be advised that this call is being recorded today, August 7, 2026.

Speaker #1: I would now like to turn the conference over to Katherine Chen, Vice President of Investor Relations. Please go ahead.

Speaker #2: Good morning, everyone, and thank you for joining us for the Cars.com Inc. second quarter 2026 conference call. With me this morning are Toby Hartman, CEO, and Sonia Jain, CFO.

Katherine Chen: Good morning, everyone, thank you for joining us for the Cars.com Inc. Q2 2026 conference call. With me this morning are Tobias Hartmann, CEO, and Sonia Jain, CFO. Toby will start by discussing business highlights from our Q2. Sonia will discuss our financial results in greater detail, along with our outlook. We'll finish the call with Q&A. Before I turn the call over to Toby, I'd like to draw your attention to our forward-looking statements and the description and definition of non-GAAP financial measures, which can be found in our presentation. We will be discussing certain non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, adjusted operating expenses, adjusted net income, and free cash flow.

Katherine Chen: Good morning, everyone, thank you for joining us for the Cars.com Inc. Q2 2026 conference call. With me this morning are Tobias Hartmann, CEO, and Sonia Jain, CFO. Tobi will start by discussing business highlights from our Q2. Sonia will discuss our financial results in greater detail, along with our outlook. We'll finish the call with Q&A. Before I turn the call over to Tobi, I'd like to draw your attention to our forward-looking statements and the description and definition of non-GAAP financial measures, which can be found in our presentation. We will be discussing certain non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, adjusted operating expenses, adjusted net income, and free cash flow.

Speaker #2: Toby will start by discussing business highlights from our second quarter. Then Sonia will discuss our financial results in greater detail, along with our outlook.

Speaker #2: We'll finish the call with Q&A. Before I turn the call over to Toby, I'd like to draw your attention to our forward-looking statement and the description and definition of non-GAAP financial measures, which can be found in our presentation.

Speaker #2: We will be discussing certain non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, adjusted operating expenses, adjusted net income, and free cash flow. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures can be found in the financial tables included with our earnings press release and in the appendix of our presentation.

Katherine Chen: Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures can be found in the financial tables included with our earnings press release and in the appendix of our presentation. Any forward-looking statements are subject to risks and uncertainties. For more information, please refer to the risk factors included in our SEC filings, including those in our most recently filed 10-K, which is available on the IR section of our website. We assume no obligation to update any forward-looking statements. Now, I'll turn the call over to Toby.

Speaker #2: Any forward-looking statements are subject to risks and uncertainties. For more information, please refer to the risk factors included in our SEC filings including those in our most recently filed 10-K, which is available on the IR section of our website.

Speaker #2: We assume no obligation to update any forward-looking statements. And now, I'll turn the call over to Toby.

Speaker #3: Thank you, Katherine. And thanks, everyone, on the call for joining us to review our second quarter 2026 results. We delivered another quarter of revenue growth and increased profitability.

Tobias Hartmann: Thank you, Katherine. Thanks to everyone on the call for joining us to review our Q2 2026 results. We delivered another quarter of revenue growth and increased profitability. Q2 revenue of $180 million was within our guidance range and grew year-over-year on the strength of dealer subscription products. Marketplace was a highlight for the quarter on both revenue and subscriber growth. Our expanded adjusted EBITDA margin of 29.4% outperformed the high end of guidance for a second consecutive quarter. We continued to generate strong free cash flow, which enabled both investment in organic growth and a 28% year-to-date increase in buybacks to return value to shareholders. Based on our results, we are pacing well to meet our 2026 financial targets, we are positioned to deliver further improvement in 2027.

Tobi Hartmann: Thank you, Katherine. Thanks to everyone on the call for joining us to review our Q2 2026 results. We delivered another quarter of revenue growth and increased profitability. Q2 revenue of $180 million was within our guidance range and grew year-over-year on the strength of dealer subscription products. Marketplace was a highlight for the quarter on both revenue and subscriber growth. Our expanded adjusted EBITDA margin of 29.4% outperformed the high end of guidance for a second consecutive quarter. We continued to generate strong free cash flow, which enabled both investment in organic growth and a 28% year-to-date increase in buybacks to return value to shareholders. Based on our results, we are pacing well to meet our 2026 financial targets, we are positioned to deliver further improvement in 2027.

Speaker #3: Q2 revenue of $180 million was within our guidance range and grew year over year on the strength of dealer subscription products. Marketplace was a highlight for the quarter on both revenue and subscriber growth.

Speaker #3: Our expanded adjusted EBITDA margin of $29.4% outperformed the high end of guidance for a second consecutive quarter. And we continued to generate strong free cash flow, which enabled both investment in organic growth and a $28% year-to-date increase in buybacks to return value to shareholders.

Speaker #3: Based on our results, we are pacing well to meet our 2026 financial targets. And we are positioned to deliver further improvement in 2027. As we laid out shortly after I joined in January, creating an interconnected marketplace-centric ecosystem is foundational to our long-term growth strategy.

Tobias Hartmann: As we laid out shortly after I joined in January, creating an interconnected marketplace-centric ecosystem is foundational to our long-term growth strategy. At its core, our marketplace flywheel is solid, and we remain a leader in driving vehicle sales at scale. Integration between marketplace websites and appraisal solutions unlocks more opportunities to improve each component of this flywheel. For example, unifying our retail appraisal and vehicle insights helps build more trust and confidence in the purchase journey. A more seamless and personalized experience between Cars.com and dealer websites also powers better shopping signals and conversion. We can speed product development velocity as we improve technical interoperability. We are operationalizing these goals through our focus on product, process, and organizational improvements, the three initiatives that have guided our year-to-date execution. Marketplace results are already responding positively to the change in our strategy and operations.

Tobi Hartmann: As we laid out shortly after I joined in January, creating an interconnected marketplace-centric ecosystem is foundational to our long-term growth strategy. At its core, our marketplace flywheel is solid, and we remain a leader in driving vehicle sales at scale. Integration between marketplace websites and appraisal solutions unlocks more opportunities to improve each component of this flywheel. For example, unifying our retail appraisal and vehicle insights helps build more trust and confidence in the purchase journey. A more seamless and personalized experience between Cars.com and dealer websites also powers better shopping signals and conversion. We can speed product development velocity as we improve technical interoperability. We are operationalizing these goals through our focus on product, process, and organizational improvements, the three initiatives that have guided our year-to-date execution. Marketplace results are already responding positively to the change in our strategy and operations.

Speaker #3: At its core, our marketplace flywheel is solid, and we remain a leader in driving vehicle sales at scale, integration between marketplace websites and appraisal solutions unlocks more opportunities to improve each component of this flywheel.

Speaker #3: For example, unifying our retail appraisal and vehicle insights helps build more trust and confidence in the purchase journey. A more seamless and personalized experience between Cars.com and dealer websites also powers better shopping signals and conversion.

Speaker #3: And we can speed product development velocity as we improve technical, interoperability. We are operationalizing these goals through our focus on product, process, and organizational improvements.

Speaker #3: The three initiatives that have guided our year-to-date execution. Marketplace results are already responding positively to the change in our strategy and operations. Marketplace revenue grew over 7% year over year in Q2.

Tobias Hartmann: Marketplace revenue grew over 7% year-over-year in Q2. Putting this in context, outside of 2021's pandemic-related recovery, this is the fastest Marketplace growth rate in our public company history. As a result, dealer revenue growth more than offset the expected decline in OEM revenue. Underpinning this growth, in Q2, Marketplace subscribers rebounded to their highest level since 2023, and Marketplace ARPD reached an all-time high. We recently launched Dealer Verified Listings, a new feature that, for the first time, integrates aspects of Accu-Trade and Marketplace. Whereas Accu-Trade has traditionally been a standalone dealership solution powering appraisals and trade-ins, we are now beginning to capitalize on its capabilities across the consumer Marketplace. Accu-Trade dealers, and soon those wanting to participate in our Dealer Verified Listings program, can display current vehicle condition reports directly onto listings. This is a differentiated alternative to the traditional backward-looking vehicle history report.

Tobi Hartmann: Marketplace revenue grew over 7% year-over-year in Q2. Putting this in context, outside of 2021's pandemic-related recovery, this is the fastest Marketplace growth rate in our public company history. As a result, dealer revenue growth more than offset the expected decline in OEM revenue. Underpinning this growth, in Q2, Marketplace subscribers rebounded to their highest level since 2023, and Marketplace ARPD reached an all-time high. We recently launched Dealer Verified Listings, a new feature that, for the first time, integrates aspects of Accu-Trade and Marketplace. Whereas Accu-Trade has traditionally been a standalone dealership solution powering appraisals and trade-ins, we are now beginning to capitalize on its capabilities across the consumer Marketplace. Accu-Trade dealers, and soon those wanting to participate in our Dealer Verified Listings program, can display current vehicle condition reports directly onto listings. This is a differentiated alternative to the traditional backward-looking vehicle history report.

Speaker #3: Putting this in context, outside of 2021’s pandemic-related recovery, this is the fastest marketplace growth rate in our public company history. And as a result, dealer revenue growth more than offset the expected decline in OEM revenue.

Speaker #3: Underpinning this growth in Q2, marketplace subscribers rebounded to their highest level since 2023, and marketplace ARPD reached an all-time high. We recently launched dealer verified listings, a new feature that, for the first time, integrates aspects of AccuTrade and Marketplace.

Speaker #3: Whereas AccuTrade has traditionally been a standalone dealership solution powering appraisals and trade-ins, we are now beginning to capitalize on its capabilities across the consumer marketplace.

Speaker #3: AccuTrade dealers and soon those wanting to participate in our dealer verified listings program can display current vehicle condition reports directly onto listings. This is a differentiated alternative to the traditional backward-looking vehicle history report.

Speaker #3: And for shoppers, the dealer verified badge is an additional trust signal unique to our marketplace. Dealer verified listings are the first step as we build cross-platform VIN-specific intelligence that helps maximize the value of each car.

Tobias Hartmann: For shoppers, the Dealer Verified badge is an additional trust signal unique to our marketplace. Dealer Verified Listings are the first step as we build cross-platform, VIN-specific intelligence that helps maximize the value of each car. Compared to process and people changes, product typically requires a longer runway before results come to fruition. Therefore, it was exciting to see Dealer Verified Listings go from development to launch within just a few months. Overall, in 2026, our deployment rate for new features has already increased by 80% year-over-year. This new operating cadence underscores our growth potential as product momentum builds across our interconnected Marketplace. We also continue to enhance the consumer product experience, adding our Carson AI shopping assistance to more Marketplace surfaces. To date, around 20% of active searches on Cars.com are engaging with Carson.

Tobi Hartmann: For shoppers, the Dealer Verified badge is an additional trust signal unique to our marketplace. Dealer Verified Listings are the first step as we build cross-platform, VIN-specific intelligence that helps maximize the value of each car. Compared to process and people changes, product typically requires a longer runway before results come to fruition. Therefore, it was exciting to see Dealer Verified Listings go from development to launch within just a few months. Overall, in 2026, our deployment rate for new features has already increased by 80% year-over-year. This new operating cadence underscores our growth potential as product momentum builds across our interconnected Marketplace. We also continue to enhance the consumer product experience, adding our Carson AI shopping assistance to more Marketplace surfaces. To date, around 20% of active searches on Cars.com are engaging with Carson.

Speaker #3: Compared to process and people changes, product typically requires a longer runway before results come to fruition. Therefore, it was exciting to see dealer verified listings go from development to launch within just a few months.

Speaker #3: Overall, in 2026, our deployment rate for new features has already increased by 80% year over year. This new operating cadence underscores our growth potential as product momentum builds across our interconnected marketplace.

Speaker #3: We also continue to enhance the consumer product experience, adding our Carson AI shopping assistant to more marketplace surfaces. Today, around 20% of active searches on Cars.com are engaging with Carson, Carson users are four times more likely to submit a lead, and accounted for nearly 30% of total leads submitted in a month of June, demonstrating our platform value.

Tobias Hartmann: Carson users are four times more likely to submit a lead and accounted for nearly 30% of total leads submitted in the month of June, demonstrating our platform value. Offering an AI-first option for car shoppers boosts conversion, contributes to overall marketing efficiency, and gives us additional bandwidth for strategic growth investments. Additional Carson features are slated for release this year, such as better comparison tools and more personalization that we expect will further improve consumer satisfaction. In terms of our overall marketplace audience, the year-over-year decline in Q2 traffic and visitors primarily reflect strategic shifts to prioritize value delivery. Adhering to a more rigorous marketing investment approach has helped us better target and convert high-intent shoppers. Q2 lead conversion was up double digits year-over-year, and performance marketing cost per lead also improved throughout the quarter.

Tobi Hartmann: Carson users are four times more likely to submit a lead and accounted for nearly 30% of total leads submitted in the month of June, demonstrating our platform value. Offering an AI-first option for car shoppers boosts conversion, contributes to overall marketing efficiency, and gives us additional bandwidth for strategic growth investments. Additional Carson features are slated for release this year, such as better comparison tools and more personalization that we expect will further improve consumer satisfaction. In terms of our overall marketplace audience, the year-over-year decline in Q2 traffic and visitors primarily reflect strategic shifts to prioritize value delivery. Adhering to a more rigorous marketing investment approach has helped us better target and convert high-intent shoppers. Q2 lead conversion was up double digits year-over-year, and performance marketing cost per lead also improved throughout the quarter.

Speaker #3: Offering an AI-first option for car shoppers boosts conversion, contributes to overall marketing efficiency, and gives us additional bandwidth for strategic growth investments. Additional Carson features are slated for release this year, such as better comparison tools and more personalization that we expect will further improve consumer satisfaction.

Speaker #3: In terms of our overall marketplace audience, the year-over-year decline in Q2 traffic and visitors primarily reflects strategic shifts to prioritize value delivery. Adhering to a more rigorous marketing investment approach has helped us better target and convert high-intent shoppers.

Speaker #3: Q2 lead conversion was up double digits year over year, and performance marketing cost per lead also improved throughout the quarter. Based on the clearly favorable customer response that fueled marketplace revenue and subscriber growth in Q2, we will continue to de-emphasize lower-quality traffic, opting instead to drive more value to dealers.

Tobias Hartmann: Based on the clearly favorable customer response that fueled Marketplace revenue and subscriber growth in Q2, we will continue to de-emphasize lower-quality traffic, opting instead to drive more value to dealers. We're also excited to have our new CMO leading these efforts. Leveraging her deep consumer and Marketplace background will help us shape and refine our tactics. We believe marketplaces remain central to the car-buying experience for shoppers. First, automotive is a considered purchase for the majority of consumers and requires deep vertical expertise and proprietary first-party insights like Dealer Verified Listings. Adding richer vehicle insights will continue to draw shoppers onto our Marketplace. Second, organic traffic has consistently remained around 60% of our total traffic. SEO declines appear to have bottomed in late 2025, and direct traffic, our largest organic channel, grew year over year in H1 2026.

Tobi Hartmann: Based on the clearly favorable customer response that fueled Marketplace revenue and subscriber growth in Q2, we will continue to de-emphasize lower-quality traffic, opting instead to drive more value to dealers. We're also excited to have our new CMO leading these efforts. Leveraging her deep consumer and Marketplace background will help us shape and refine our tactics. We believe marketplaces remain central to the car-buying experience for shoppers. First, automotive is a considered purchase for the majority of consumers and requires deep vertical expertise and proprietary first-party insights like Dealer Verified Listings. Adding richer vehicle insights will continue to draw shoppers onto our Marketplace. Second, organic traffic has consistently remained around 60% of our total traffic. SEO declines appear to have bottomed in late 2025, and direct traffic, our largest organic channel, grew year over year in H1 2026.

Speaker #3: We are also excited to have our new CMO leading these efforts. Leveraging her deep consumer and marketplace background will help us shape and refine our tactics.

Speaker #3: We believe marketplaces remain central to the car buying experience for shoppers. First, automotive is a considered purchase for the majority of consumers and requires deep vertical expertise and proprietary first-party insights like dealer verified listings.

Speaker #3: Adding richer vehicle insights will continue to draw shoppers onto our marketplace. Second, organic traffic has consistently remained around 60% of our total traffic. SEO declines appear to have bottomed in late 2025 and direct traffic our largest organic channel grew year over year in the first half of 2026.

Speaker #3: Third, we view AI as a net benefit to the car shopping experience and seek to be a valuable partner in this expanded ecosystem. We are the number one most cited public automotive marketplace among leading AI platforms.

Tobias Hartmann: Third, we view AI as a net benefit to the car shopping experience and seek to be a valuable partner in this expanded ecosystem. We are the number one most cited public automotive Marketplace amongst leading AI platforms. We also recently added 25-plus years of editorial content into our Cars.com ChatGPT app to enhance the consumer experience. In the medium term, we anticipate that pursuing a thoughtful AI strategy should be additive to our growth ambition. Each incremental step on product integration, process optimization, and organizational improvement contributed to the meaningful uptick in Marketplace performance in H1. Simply put, our playbook shows impact. We will reverse the recent decline in website customers by applying these same principles, particularly product innovation. Our goal is to accelerate product development velocity for websites, first by adding current Marketplace capabilities.

Tobi Hartmann: Third, we view AI as a net benefit to the car shopping experience and seek to be a valuable partner in this expanded ecosystem. We are the number one most cited public automotive Marketplace amongst leading AI platforms. We also recently added 25-plus years of editorial content into our Cars.com ChatGPT app to enhance the consumer experience. In the medium term, we anticipate that pursuing a thoughtful AI strategy should be additive to our growth ambition. Each incremental step on product integration, process optimization, and organizational improvement contributed to the meaningful uptick in Marketplace performance in H1. Simply put, our playbook shows impact. We will reverse the recent decline in website customers by applying these same principles, particularly product innovation. Our goal is to accelerate product development velocity for websites, first by adding current Marketplace capabilities.

Speaker #3: We also recently added 25-plus years of editorial content into our Cars.com ChatGPT app to enhance the consumer experience. In the medium term, we anticipate that pursuing a thoughtful AI strategy should be additive to our growth ambition.

Speaker #3: Each incremental step on product integration, process optimization, and organizational improvement contributed to a meaningful uptick in marketplace performance in the first half. Simply put, our playbook shows impact.

Speaker #3: And we will reverse the recent decline in website customers by applying the same principles particularly product innovation. Our goal is to accelerate product development velocity for websites first by adding current marketplace capabilities.

Speaker #3: This includes personalization AI features like Carson and interconnected data insights between our products. For consumers, that means a more seamless and customized shopping experience when moving across Cars.com and dealer-inspired websites.

Tobias Hartmann: This includes personalization, AI features like Carson, and interconnected data insights between our products. For consumers, that means a more seamless and customized shopping experience when moving across Cars.com and Dealer Inspire websites. We will provide seekers with more options and choices for an interconnected Marketplace experience. For dealers, aggregated consumer signals yield richer leads and a distinct advantage to closing sales. These enhancements, plus further technical and product investments slated for 2027, are expected to position our website's business for renewed growth. In summary, we have made solid progress to deliver our goals and objectives. Our 2026 financial performance has consistently met or exceeded guidance. Marketplace results are especially encouraging and reflect strong execution of our new strategy. Operating leverage is also improving via cost efficiencies, tighter internal processes, and a leaner yet more productive organization.

Tobi Hartmann: This includes personalization, AI features like Carson, and interconnected data insights between our products. For consumers, that means a more seamless and customized shopping experience when moving across Cars.com and Dealer Inspire websites. We will provide seekers with more options and choices for an interconnected Marketplace experience. For dealers, aggregated consumer signals yield richer leads and a distinct advantage to closing sales. These enhancements, plus further technical and product investments slated for 2027, are expected to position our website's business for renewed growth. In summary, we have made solid progress to deliver our goals and objectives. Our 2026 financial performance has consistently met or exceeded guidance. Marketplace results are especially encouraging and reflect strong execution of our new strategy. Operating leverage is also improving via cost efficiencies, tighter internal processes, and a leaner yet more productive organization.

Speaker #3: We will provide seekers with more options and choices for an interconnected marketplace experience. For dealers, aggregated consumer signals yield richer leads and a distinct advantage to closing sales.

Speaker #3: These enhancements plus further technical and product investments slated for 2027 are expected to position our website's business for renewed growth. In summary, we have made solid progress to deliver our goals and objectives.

Speaker #3: Our 2026 financial performance has consistently met or exceeded guidance. Marketplace results are especially encouraging, and reflect strong execution of our new strategy. Operating leverage is also improving via cost efficiencies tighter internal processes and a leaner yet more productive organization.

Speaker #3: And product green shoots are showing the untapped potential of an interconnected marketplace platform. I want to acknowledge the discipline, hard work, and focus of our team, whose execution and collaboration has been instrumental to these initial successes.

Tobias Hartmann: Product green shoots are showing the untapped potential of an interconnected Marketplace platform. I want to acknowledge the discipline, hard work, and focus of our team, whose execution and collaboration has been instrumental to these initial successes. We are confident that these efforts will compound to drive long-term sustainable growth and shareholder value. Now Sonia will discuss our financial results and outlook. Sonia?

Tobi Hartmann: Product green shoots are showing the untapped potential of an interconnected Marketplace platform. I want to acknowledge the discipline, hard work, and focus of our team, whose execution and collaboration has been instrumental to these initial successes. We are confident that these efforts will compound to drive long-term sustainable growth and shareholder value. Now Sonia will discuss our financial results and outlook. Sonia?

Speaker #3: We are confident that these efforts will compound to drive long-term sustainable growth and shareholder value. Now, Sonia will discuss our financial results and outlook.

Speaker #3: Sonia,

Speaker #2: Thank you, Toby. Second quarter financial performance highlighted strong execution of our marketplace-first strategy and improved operating leverage across our business. Revenue of $179.9 million was up 1% year over year and within our guidance range.

Sonia Jain: Thank you, Toby. Q2 financial performance highlighted strong execution of our Marketplace first strategy and improved operating leverage across our business. Revenue of $179.9 million was up 1% year over year and within our guidance range. Dealer revenue growth was up 3% year over year and was slightly offset by the anticipated decline in OEM and national revenue, which was down 18% year over year. Within dealer revenue, robust Marketplace growth more than offset flat to down performance for solutions and media products. ARPD and dealer count also broadly followed these same trends. Q2 ARPD of $2,500 was up 3% year over year and 1% quarter over quarter. Marketplace was the primary contributor to this year over year improvement, and we set a new record for Marketplace-only ARPD during Q2.

Sonia Jain: Thank you, Tobi. Q2 financial performance highlighted strong execution of our Marketplace first strategy and improved operating leverage across our business. Revenue of $179.9 million was up 1% year over year and within our guidance range. Dealer revenue growth was up 3% year over year and was slightly offset by the anticipated decline in OEM and national revenue, which was down 18% year over year. Within dealer revenue, robust Marketplace growth more than offset flat to down performance for solutions and media products. ARPD and dealer count also broadly followed these same trends. Q2 ARPD of $2,500 was up 3% year over year and 1% quarter over quarter. Marketplace was the primary contributor to this year over year improvement, and we set a new record for Marketplace-only ARPD during Q2.

Speaker #2: Dealer revenue growth was up 3% year over year, and was slightly offset by the anticipated decline in OEM and national revenue, which was down 18% year over year.

Speaker #2: Within dealer revenue, robust marketplace growth more than offset flat to down performance for solutions and media products. ARPD and dealer account also broadly followed these same trends.

Speaker #2: Q2 ARPD of $2,500 was up 3% year over year, and 1% quarter over quarter. Marketplace was the primary contributor to this year-over-year improvement, and we set a new record for marketplace-only ARPD during Q2.

Speaker #2: Premium Plus was up quarter over quarter, and the fastest growing of our three marketplace packages, further supporting favorable pricing mix. We're making progress towards our stated 15% target adoption rate for 2026.

Sonia Jain: Premium Plus was up quarter over quarter and the fastest growing of our three Marketplace packages, further supporting favorable pricing mix. We are making progress towards our stated 15% target adoption rate for 2026. Lower uptake of add-on dealer media products remained a near-term headwind, partially offsetting gains from core Marketplace adoption. Consolidated dealer count reflected similar puts and takes. Marketplace subscribers were up year over year and quarter over quarter. Website units declined compared to a year ago, consistent with our view that future DI growth hinges on product innovation and packaging rather than unit volume expansion. We are applying the same product-led approach that has worked well for Marketplace. Step one is bringing existing Marketplace capabilities to websites in Q3 and Q4, an efficient way to strengthen our focus on DI product innovation. As Toby also mentioned, we launched Dealer Verified Listings in June.

Sonia Jain: Premium Plus was up quarter over quarter and the fastest growing of our three Marketplace packages, further supporting favorable pricing mix. We are making progress towards our stated 15% target adoption rate for 2026. Lower uptake of add-on dealer media products remained a near-term headwind, partially offsetting gains from core Marketplace adoption. Consolidated dealer count reflected similar puts and takes. Marketplace subscribers were up year over year and quarter over quarter. Website units declined compared to a year ago, consistent with our view that future DI growth hinges on product innovation and packaging rather than unit volume expansion. We are applying the same product-led approach that has worked well for Marketplace. Step one is bringing existing Marketplace capabilities to websites in Q3 and Q4, an efficient way to strengthen our focus on DI product innovation. As Tobi also mentioned, we launched Dealer Verified Listings in June.

Speaker #2: However, lower uptake of add-on dealer media products remained a near-term headwind, partially offsetting gains from core marketplace adoption. Consolidated dealer count reflected similar puts and takes.

Speaker #2: Marketplace subscribers were up year over year and quarter over quarter, however, website units declined compared to a year ago, consistent with our view that future DI growth hinges on product innovation and packaging rather than unit volume expansion.

Speaker #2: Therefore, we're applying the same product-led approach that has worked well for marketplace, step one is bringing existing marketplace capabilities to websites in Q3 and Q4.

Speaker #2: An efficient way to strengthen our focus on DI product innovation. As Toby also mentioned, we launched dealer verified listings in June. This is an important first step as we integrate our product offerings to capture greater platform value, simplify go-to-market motions, and unlock new cross-selling opportunities.

Sonia Jain: This is an important first step as we integrate our product offerings to capture greater platform value, simplify go-to-market motions, and unlock new cross-selling opportunities. Dealer Verified Listings are currently available to existing AccuTrade customers, and in Q4, we will begin expanding this feature to Marketplace customers to drive further growth and adoption. As we migrate towards a more integrated Marketplace and appraisal bundle, individual point sales of AccuTrade will become less relevant to our strategy. It is worth noting that AccuTrade subscribers were roughly flat sequentially in Q2, even as we retool our offering. Rounding out our revenue discussion, OEM and national revenue was down $3 million year over year in Q2. We signaled in May that this quarter would represent a trough in OEM revenue.

Speaker #2: Dealer verified listings are currently available to existing AccuTrade customers and in Q4 we will begin expanding this feature to marketplace customers to drive further growth and adoption.

Speaker #2: As we migrate towards a more integrated marketplace and appraisal bundle, individual point sales of AccuTrade will become less relevant to our strategy. However, it's worth noting that AccuTrade subscribers were roughly flat sequentially in Q2, even as we retool our offering.

Speaker #2: Rounding out our revenue discussion, OEM and national revenue was down $3 million year over year in Q2. We signaled in May that this quarter would represent a trough in OEM revenue.

Speaker #2: And based on positive performance in July and incremental spend commitments for the remainder of the year, we anticipate quarter over quarter growth in Q3.

Sonia Jain: Based on positive performance in July and incremental spend commitments for the remainder of the year, we anticipate quarter over quarter growth in Q3. Now to discuss cost. Q2 operating expenses were $152.1 million, down 7% year over year. We drove operating leverage across the organization, maintaining strong cost discipline and a continued focus on process efficiencies. A meaningful decline in depreciation and amortization expense following the full amortization of customer lists tied to our 2017 spinoff, combined with lower compensation costs, accounted for the majority of the year over year delta. Q2 adjusted operating expenses were $144.3 million, down 6% year over year from the same cost levers. For the following line item detail, all comparisons are on a year over year basis unless otherwise noted. Product and technology expenses decreased $2.7 million on a reported basis and $2.5 million on an adjusted basis.

Speaker #2: Now to discuss cost. Second quarter operating expenses were $152.1 million. Down 7% year over year. We drove operating leverage across the organization, maintaining strong cost discipline and a continued focus on process efficiencies.

Speaker #2: A meaningful decline in depreciation and amortization expense following the full amortization of customer lists tied to our 2017 spinoff, combined with lower compensation costs, accounted for the majority of the year-over-year delta.

Speaker #2: Q2 adjusted operating expenses were $144.3 million. Down 6% year over year from the same cost levers. For the following line item detail, all comparisons are on a year-over-year basis unless otherwise noted.

Speaker #2: Product and technology expenses decreased 2.7 million on a reported basis, and 2.5 million on an adjusted basis. Lower compensation expense related to streamlining our processes and improving interconnectivity, and improvements in our capitalization rate, drove both the reported and adjusted decrease.

Sonia Jain: Lower compensation expense related to streamlining our processes and improving interconnectivity and improvements in our capitalization rate drove both the reported and adjusted decrease. Marketing and sales increased roughly $2.7 million on both a reported and adjusted basis, largely driven by targeted marketing to prioritize value delivery. General and administrative expense was down $3.5 million on a reported basis and roughly $1 million on an adjusted basis. The reported decrease was primarily due to the elimination of the D2C earnout expense accrual and lower compensation expense. As a reminder, the D2C earnout is considered a special item and not included in adjusted operating expenses, which accounts for the delta between the decline in reported and adjusted G&A expense. Q2 net income was $14.3 million, or $0.25 per diluted share, compared to net income of $7 million, or $0.11 per diluted share a year ago.

Speaker #2: Marketing and sales increased roughly 2.7 million on both the reported and adjusted basis, largely driven by targeted marketing to prioritize value delivery. General and administrative expense was down 3.5 million on a reported basis, and roughly $1 million on an adjusted basis.

Speaker #2: The reported decrease was primarily due to the elimination of the D2C earn-out expense accrual and lower compensation expense. As a reminder, the D2C earn-out is considered a special item and not included in adjusted operating expenses, which accounts for the delta between the decline in reported and adjusted G&A expense.

Speaker #2: Second quarter net income was $14.3 million, or $0.25 per diluted share, compared to net income of $7 million, or $0.11 per diluted share a year ago.

Speaker #2: Net income was primarily driven by improved operating income. Adjusted net income for the second quarter was $28.7 million, or 51 cents per diluted share.

Sonia Jain: Net income was primarily driven by improved operating income. Adjusted net income for Q2 was $28.7 million, or $0.51 per diluted share, compared to $26.4 million or $0.41 per diluted share a year ago. Adjusted EBITDA of $53 million in Q2 was up 4% year over year, healthily outpacing revenue growth and clearly showing the early impact of our process, cost, and organizational improvements. Adjusted EBITDA margin of 29.4% was up nearly 100 basis points year over year. Moving to the cash flow statement and balance sheet. Net cash provided by operating activities totaled $55.6 million for H1, compared to $55.7 million a year ago. Free cash flow was $43.5 million year to date, up modestly from $41.8 million a year ago, when we had higher spending related to the build-out of our office headquarters.

Speaker #2: Compared to 26.4 million or 41 cents per diluted share a year ago. Adjusted EBITDA of $53 million in the second quarter was up 4% year over year.

Speaker #2: Healthily outpacing revenue growth and clearly showing the early impact of our process, cost, and organizational improvements. Adjusted EBITDA margin of $29.4% was up nearly 100 basis points year over year.

Speaker #2: Moving to the cash flow statement and balance sheet. Net cash provided by operating activities totaled $55.6 million for the first half of the year, compared to $55.7 million a year ago.

Speaker #2: Free cash flow was $43.5 million year to date, up modestly from $41.8 million a year ago, when we had higher spending related to the build-out of our office headquarters.

Speaker #2: Share buybacks totaled $6.2 million shares, for 57 million year to date. Since the start of the year, we have bought back and retired over 10% of shares outstanding.

Sonia Jain: Share buybacks totaled 6.2 million shares for $57 million year to date. Since the start of the year, we have bought back and retired over 10% of shares outstanding. We are pacing well towards our 2026 share repurchase target of $90 million through opportunistic deployment of our free cash flow in H1 2026. Lastly, debt outstanding was $450 million as of 30 June 2026, which includes a $5 million debt payment during Q2. Total liquidity was $333.3 million as of 30 June 2026, and we have ample capacity for our capital allocation needs. Finally, we'll conclude with outlook. Q3 revenue growth is expected to be flat to up 2% year over year, based on continued dealer revenue growth and marketplace improvement, and quarter over quarter improvement for OEM and national revenue.

Speaker #2: We are pacing well toward our 2026 share repurchase target of $90 million through opportunistic deployment of our free cash flow in the first half of 2026.

Speaker #2: Lastly, debt outstanding was $450 million as of June 30, 2026, which includes a $5 million debt payment during the second quarter. Total liquidity was $333.3 million.

Speaker #2: As of June 30, 2026. And we have ample capacity for our capital allocation needs. Finally, we'll conclude with Outlook. Third quarter revenue growth is expected to be flat to up 2% year over year, based on continued dealer revenue growth and marketplace improvement.

Speaker #2: And quarter over quarter improvement for OEM and national revenue. Third quarter adjusted EBITDA margin is expected to be between $28.5 and $29.5%, benefiting from continued cost and operational discipline.

Sonia Jain: Q3 adjusted EBITDA margin is expected to be between 28.5% and 29.5%, benefiting from continued cost and operational discipline. Lastly, we are also reaffirming our full year 2026 guidance of flat to 2% revenue growth and adjusted EBITDA margin of 29% to 30%. With that, I'd like to open the line for Q&A.

Speaker #2: Lastly, we are also reaffirming our full year 2026 guidance of flat to 2% revenue growth and adjusted EBITDA margin of $29 to 30%. And with that, I'd like to open the line for Q&A.

Speaker #1: Thank you. Ladies and gentlemen, we will now begin the question and answer session. And if you wish to ask a question, please press star and one on your telephone keypad, and wait for your name to be announced.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star and one on your telephone keypad and wait for your name to be announced. Once again, star and one if you wish to ask a question. Please limit your question to one question and one follow-up. Please stand by while we compile the Q&A roster. Thank you for waiting. We now take our first question. This comes from Thomas White from D.A. Davidson. Your line's now open. Please go ahead.

Speaker #1: Once again, star and one if you wish to ask a question. Please limit your question to one question and one follow-up. Please stand by while we'll compile the Q&A roster.

Speaker #1: Thank you for waiting. We now take our first question. And this comes from Thomas White from DA Davidson. Your line's now open. Please go ahead.

Speaker #3: Thank you. Good morning, guys. So I guess just first off, marketplace looks like a nice quarter there, 7% growth. I was hoping maybe you could just unpack a little bit more, kind of the drivers there.

Tom White: Thank you. Good morning, guys. I guess just first off, Marketplace looks like a nice quarter there, 7% growth. I was hoping maybe you could just unpack a little bit more kind of the drivers there, kind of between maybe some of the premium package adoption and the momentum from the new products. Just sort of talk a little bit about the sustainability of that kind of trajectory. I've got a follow-up. Thanks.

Thomas White: Thank you. Good morning, guys. I guess just first off, Marketplace looks like a nice quarter there, 7% growth. I was hoping maybe you could just unpack a little bit more kind of the drivers there, kind of between maybe some of the premium package adoption and the momentum from the new products. Just sort of talk a little bit about the sustainability of that kind of trajectory. I've got a follow-up. Thanks.

Speaker #3: You know, kind of between maybe the some of the premium package adoption and the momentum from the new products. And just sort of talk a little bit about the sustainability of that kind of trajectory.

Speaker #3: And then I've got a follow-up. Thanks.

Speaker #2: Thanks for the question. No, we're excited about the marketplace performance that we saw in Q2. I would say that it was driven by a combination of both improvements in dealer account, which really help accelerate the marketplace flywheel, and continued progress on ARPD, a chunk of which was driven by the new premium plus package that we rolled out last year.

Sonia Jain: Thanks for the question. We're excited about the Marketplace performance that we saw in Q2. I would say that it was driven by a combination of both improvements in dealer count, which really help accelerate the Marketplace flywheel and continued progress on ARPD, a chunk of which was driven by the new Premium Plus package that we rolled out last year. We continue to see good adoption there. Our target, as a reminder, is to get to 15% penetration rate by the end of the year.

Speaker #2: We continue to see good adoption there. Our target as a reminder is to get to 15% penetration rate. By the end of the year.

Speaker #3: Okay. Great. And then so you called out growth in lead volume, but, you know, it's still a pretty sharp decline in unique Toby, maybe can you help us or Sonia, help us reconcile that a little bit?

Tom White: Okay, great. You called out growth in lead volume, but it's still a pretty sharp decline in uniques. Toby, maybe can you help us or Sonia, help us reconcile that a little bit? It didn't sound like SEO headwinds for you kind of have gotten worse, although there's some other kind of internet marketplaces who are talking about that. I don't know, just help us kind of reconcile what's going on there with uniques and eventually I'd presume that trend has to change, particularly if you're going to look to be adding more dealers to the Marketplace.

Thomas White: Okay, great. You called out growth in lead volume, but it's still a pretty sharp decline in uniques. Tobi, maybe can you help us or Sonia, help us reconcile that a little bit? It didn't sound like SEO headwinds for you kind of have gotten worse, although there's some other kind of internet marketplaces who are talking about that. I don't know, just help us kind of reconcile what's going on there with uniques and eventually I'd presume that trend has to change, particularly if you're going to look to be adding more dealers to the Marketplace.

Speaker #3: It didn't sound like SEO headwinds for you. Kind of have gotten worse although there's some other kind of internet marketplaces who are talking about that.

Speaker #3: So I don't know, just help us kind of reconcile what's going on there with uniques and eventually I'd presume that, you know, that trend has to change particularly if you're going to look to be adding more dealers to the marketplace.

Speaker #4: Yeah, sure. As we laid out and shared, this is really an intentional shift we looked at our marketing spend and our marketing practice and we figured that there were some inefficiencies.

Tobias Hartmann: Yeah, sure. As we laid out and shared, this is really an intentional shift. We looked at our marketing spend and our marketing practice, and we figured that there were some inefficiencies. We drove a lot of traffic in the past and a lot of clicks that didn't convert into leads. We do not want to do this anymore. We are intentionally shifting to prioritize the value delivery versus the pure audience reach. We're very happy to see that this is actually kicking in. A lot better conversion and lead volume also kicking in. We also have a new CMO who started. She's going to take it to a new level. You saw with Marketplace, obviously it's a good sign that it's working. You saw the growth kicking in. You saw also the dealer growth or the revenue growth.

Tobi Hartmann: Yeah, sure. As we laid out and shared, this is really an intentional shift. We looked at our marketing spend and our marketing practice, and we figured that there were some inefficiencies. We drove a lot of traffic in the past and a lot of clicks that didn't convert into leads. We do not want to do this anymore. We are intentionally shifting to prioritize the value delivery versus the pure audience reach. We're very happy to see that this is actually kicking in. A lot better conversion and lead volume also kicking in. We also have a new CMO who started. She's going to take it to a new level. You saw with Marketplace, obviously it's a good sign that it's working. You saw the growth kicking in. You saw also the dealer growth or the revenue growth.

Speaker #4: We drove a lot of traffic in the past and a lot of clicks that didn't convert into leads. So we do not want to do this anymore.

Speaker #4: So we are intentionally shifting to prioritize the value delivery versus the pure audience reach. And we're very happy to see that this is actually kicking in.

Speaker #4: So a lot better conversion and lead volume also kicking in. We also have a new CMO who started, so she's going to take it to a new level.

Speaker #4: So you saw with marketplace, obviously it's a good sign that it's working. You saw the growth kicking in. You saw also the dealer growth and the revenue growth.

Speaker #4: So we think this is the right strategy. And of course, we'll create the right momentum to also reinvest in the right spots. But again, lower funnel versus just upper funnel.

Tobias Hartmann: We think that's the right strategy. Of course, we'll create the right momentum to also reinvest in the right spots. Again, lower funnel versus upper funnel. Thanks.

Tobi Hartmann: We think that's the right strategy. Of course, we'll create the right momentum to also reinvest in the right spots. Again, lower funnel versus upper funnel. Thanks.

Speaker #4: Thanks.

Speaker #3: Thank you.

Tom White: Thank you.

Thomas White: Thank you.

Operator: Thank you. The next question comes from Marvin Fong from U.S. Bancorp. Your line is now open. Please go ahead.

Speaker #1: Thank you. And the next question comes from Marvin Fong from US Bank Corp. Your line is now open. Please go ahead.

Speaker #3: Great. Good morning. Thanks for taking my questions here. Just would like to ask a question on the subscribers for solutions. Talked about turning that around with more innovation and new products.

Marvin Fong: Great. Good morning. Thanks for taking my questions here. Just would like to ask a question on the subscribers for solutions. Talked about turning that around with more innovation and new products. Could you just talk about the timeline you have for rolling out those new products, and do you have a timeline in mind for when we can expect that the subscriber count there to stabilize and then turn positive? Second question, I know it was just launched in June, but just talk about what you are seeing in terms of leads and conversion rates, if you are able to, on the Dealer Verified Listings product, and what is the monetization strategy for that? What packages would it be included in, and how would you monetize outside of Accu-Trade-specific subscribers? Thank you.

Speaker #3: Could you just kind of talk about the timeline you have for rolling out those new products and do you have a timeline in mind for when we can expect that the dealer or the subscriber count there to stabilize and then turn positive?

Speaker #3: And then second question, I know it was just launched in June, but could you just talk about what you're seeing in terms of leads and conversion rates if you're able to on the dealer verified product and what's the monetization strategy for that?

Speaker #3: You know, what packages would it be included in and how would you monetize outside of I can trade specific subscribers? Thank you.

Speaker #4: Yeah, hi Marvin. Toby, thank you for your questions. Let's talk about the first part, which is the website part and the DI part. First of all, we'd like to recall that we did tell you in the future that the future growth would be a little bit slowing down.

Tobias Hartmann: Hi, Marvin. It is Toby. Thank you for your questions. Let us talk about the first part, which is the website part, which is the AI part. First of all, we would like to recall that we did tell you that the future growth would be a little bit slowing down, given the fact that we actually repackaged, and this is actually what we did. It is not just about a mere volume, but it is also the price points and the packaging. We pushed that, and that is totally in line with strategy. Having said that, our value delivery remains really, really strong. We are a really scaled provider. We are endorsed by pretty much every major OEM, and we are still winning new customers. Let us also talk about the weakness, which I would like to address. First of all, there is a slower pace of new feature releases to date.

Tobi Hartmann: Hi, Marvin. It is Tobi. Thank you for your questions. Let us talk about the first part, which is the website part, which is the AI part. First of all, we would like to recall that we did tell you that the future growth would be a little bit slowing down, given the fact that we actually repackaged, and this is actually what we did. It is not just about a mere volume, but it is also the price points and the packaging. We pushed that, and that is totally in line with strategy. Having said that, our value delivery remains really, really strong. We are a really scaled provider. We are endorsed by pretty much every major OEM, and we are still winning new customers. Let us also talk about the weakness, which I would like to address. First of all, there is a slower pace of new feature releases to date.

Speaker #4: And given the fact that we actually repackaged—and this is actually what we did—it's not just about mere volume, but it's also the price points and the packaging.

Speaker #4: So we pushed that and that's totally in line with strategy. Having said that, our value delivery remains really, really strong. We're really scaled provider.

Speaker #4: We endorse by pretty much every major OEM. And we're still winning new customers. But let's also talk about the weakness, which I'd like to address.

Speaker #4: First of all, there's a slower pace of new feature releases to date. And what we've done is we've rolled out the playbook for marketplace.

Tobias Hartmann: What we have done is we have rolled out the playbook for Marketplace. We talked about it. We are seeing great productivity enhancements and acceleration, and we are going to apply that same playbook also for the solutions business. We have a pretty exciting roadmap ahead as we work behind closed doors, which will actually focus on the interconnectivity with some of the Marketplace functionalities. Another point I would like to mention is, we do have some organizational and process misalignment in the past, which we are also addressing as part of our reorganization. We have named a new GM, and we are really picking up speed there. Over the next two to three quarters, there will be a focus on really product innovation and applying the same playbook. We are very confident that we will get this back on a growth trajectory.

Tobi Hartmann: What we have done is we have rolled out the playbook for Marketplace. We talked about it. We are seeing great productivity enhancements and acceleration, and we are going to apply that same playbook also for the solutions business. We have a pretty exciting roadmap ahead as we work behind closed doors, which will actually focus on the interconnectivity with some of the Marketplace functionalities. Another point I would like to mention is, we do have some organizational and process misalignment in the past, which we are also addressing as part of our reorganization. We have named a new GM, and we are really picking up speed there. Over the next two to three quarters, there will be a focus on really product innovation and applying the same playbook. We are very confident that we will get this back on a growth trajectory.

Speaker #4: We talked about it. We're seeing great productivity enhancements. And acceleration. And we are going to apply that same playbook also for the solutions business.

Speaker #4: So we have a pretty exciting roadmap ahead that we work behind closed doors. Which will actually focus on the interconnectivity with some of the marketplace functionalities.

Speaker #4: And then another point I'd like to mention is we do have some organizational and process misalignment in the past, which we also addressing as part of our reorganization.

Speaker #4: We've named the new GM. And we're really picking up speed there. So over the next, you know, two to three quarters, there will be a focus on really product innovation and applying the same playbook to be very confident that we'll get this back on a growth trajectory.

Speaker #4: Now, regarding your second question about dealer-verified listings, we're really very happy about that because it took us only a few months to launch that.

Tobias Hartmann: Regarding your second question with Dealer Verified Listings, we are really very happy about that because it took us only a few months to launch that. What it does is, in terms of impact, it is basically creating already more impressions, which then converts into higher click-through rates to VDPs, which essentially then drives faster listing turns. Why? Because this is a major trust signal that we are integrating into Marketplace to stand out and help consumers really getting a better coordination between lots of vehicles, and there is either CPOs or nothing. This is another alternative that looks at not just the historic vehicle report, but at the actual condition and at the actual inspection that a dealer had to go through by applying some of the assets from Accu-Trade. View this as a really important step, first step. We will share more data points.

Tobi Hartmann: Regarding your second question with Dealer Verified Listings, we are really very happy about that because it took us only a few months to launch that. What it does is, in terms of impact, it is basically creating already more impressions, which then converts into higher click-through rates to VDPs, which essentially then drives faster listing turns. Why? Because this is a major trust signal that we are integrating into Marketplace to stand out and help consumers really getting a better coordination between lots of vehicles, and there is either CPOs or nothing. This is another alternative that looks at not just the historic vehicle report, but at the actual condition and at the actual inspection that a dealer had to go through by applying some of the assets from Accu-Trade. View this as a really important step, first step. We will share more data points.

Speaker #4: And what it does is in terms of impact, it's basically creating already more impressions, which then converts into higher click-through rates. Two BDPs. Which essentially then drives faster listing turns.

Speaker #4: Why? Because this is a major trust signal that we are integrating into marketplace to stand out and help consumers really getting a better coordination between lots of vehicles.

Speaker #4: And there's either CPOs or nothing. And this is another alternative that looks at the not just at the historic vehicle report, but at the actual condition and at the actual inspection that a dealer had to go through by applying some of the assets from AccuTrade.

Speaker #4: To view this as a really important step, first step, we'll share more data points. We just rolled it out. So it's too early, but we're testing heavily.

Tobias Hartmann: We just rolled it out, it's too early, but we are testing heavily towards an interconnected experience with a focus on trust signals and guiding consumers. Hopefully, this is some context for you. Thank you.

Tobi Hartmann: We just rolled it out, it's too early, but we are testing heavily towards an interconnected experience with a focus on trust signals and guiding consumers. Hopefully, this is some context for you. Thank you.

Speaker #4: Towards an interconnected experience with a focus on trust signals. And guiding consumers. So hopefully this is some context for you. Thank you.

Speaker #3: That was great. Thank you.

Marvin Fong: That was great. Thank you.

Speaker #1: Thank you. And the next question comes from Gary Prestopino from Barrington Research. Your line is now open. Please go ahead.

Operator: Thank you. The next question comes from Gary Prestopino from Barrington Research. Your line is now open. Please go ahead.

Gary Prestopino: Hi. Good morning, all. Hey, Toby. Good progress here. I guess with some of the Marketplace revenue growth is, excuse me, is that really somewhat of a function of that you're now got the sales force selling an integrated product and you're getting more uptake because of that integrated product sales approach?

Gary Prestopino: Hi. Good morning, all. Hey, Tobi. Good progress here. I guess with some of the Marketplace revenue growth is, excuse me, is that really somewhat of a function of that you're now got the sales force selling an integrated product and you're getting more uptake because of that integrated product sales approach?

Speaker #5: Hi, good morning all. Hey, Toby. Good progress here. I guess with some of the marketplace revenue growth, is excuse me, is that really somewhat of a function of that year now?

Speaker #5: Got the Salesforce selling and integrated product and you're getting more uptake because of that integrated product sales approach?

Speaker #4: Yeah, thank you. There's a couple of factors that certainly won I'm glad you called it out. We made good progress there as well. But you know the other piece is we're bundling it and it's easier to understand.

Tobias Hartmann: Thank you. There's a couple of factors. That's certainly one. I'm glad you called it out. We made good progress there as well. The other piece is we are bundling it, and it's easier to understand, it's easier to package, and it's easier to roll it out. Away from point solutions, more towards an interconnected subscription with a clear value delivery. Also, let's not forget about the marketing piece that we just called out. We are focused on delivering more leads as opposed to just more traffic. At the very end, that's the value delivery that dealers want. So it's a combination of the process and organizational adjustments we made, plus a clear interconnectivity. First steps, we're by no means done. Thirdly, sales efficiency and packaging. Fourthly, support from marketing efficiency and greater lead volume. Thank you.

Tobi Hartmann: Thank you. There's a couple of factors. That's certainly one. I'm glad you called it out. We made good progress there as well. The other piece is we are bundling it, and it's easier to understand, it's easier to package, and it's easier to roll it out. Away from point solutions, more towards an interconnected subscription with a clear value delivery. Also, let's not forget about the marketing piece that we just called out. We are focused on delivering more leads as opposed to just more traffic. At the very end, that's the value delivery that dealers want. So it's a combination of the process and organizational adjustments we made, plus a clear interconnectivity. First steps, we're by no means done. Thirdly, sales efficiency and packaging. Fourthly, support from marketing efficiency and greater lead volume. Thank you.

Speaker #4: It's easier to package and it's easier to roll it out. So away from point solutions, more towards an interconnected subscription with a clear value delivery.

Speaker #4: And then also, let's not forget about the marketing piece that we just called out. We are focused on delivering more leads as opposed to just more traffic.

Speaker #4: And that is the at the very end, that's the value delivery that dealers want. So it's a combination of the process and organizational adjustments we made plus a clear interconnectivity.

Speaker #4: First steps, we'll by no means done. Thirdly, sales efficiency and packaging. And fourthly, support from marketing efficiency and greater lead volume. Thank you.

Speaker #5: Okay. And then just to follow up on the verified product which is being generated by AccuTrade, is the data that is being shown there very similar to some of the output that we were shown in Las Vegas or is it more or less just a deeper dive on a light versus a car fax where you know it's going to say no mechanical issues, et cetera, et cetera, things like that?

Gary Prestopino: Just to follow up on the verified product, which is being generated by AccuTrade. Is the data that is being shown there very similar to some of the output that we were shown in Las Vegas, or is it more or less just a deeper dive versus a CARFAX where it's going to say no mechanical issues, etc., things like that?

Speaker #4: Yeah, that's a great question. Thank you. So the main difference between what you saw in Vegas and how we utilizing it currently is it was very much dealer facing in Vegas, which is if you remember, this was used as a tool to determine the best price, how to price the vehicle.

Tobias Hartmann: It's a great question. Thank you. The main difference between what you saw in Vegas and how we're utilizing it currently is, it was very much dealer-facing in Vegas. Which is, if you remember, this was used as a tool to determine the best price, how to price the vehicle from a dealer's perspective to then put it onwards to a consumer-facing potential sale listing. What this does today, our focus is really on guiding consumers. It's a shift more towards consumers, giving them additional data points to really understand that this is a vehicle and a VIN number that went through an additional loop of 15, 18-point inspection, which, by the way, the dealer adhered to and signed off. That's the difference. It's more consumer-facing as opposed to just price labeling.

Tobi Hartmann: It's a great question. Thank you. The main difference between what you saw in Vegas and how we're utilizing it currently is, it was very much dealer-facing in Vegas. Which is, if you remember, this was used as a tool to determine the best price, how to price the vehicle from a dealer's perspective to then put it onwards to a consumer-facing potential sale listing. What this does today, our focus is really on guiding consumers. It's a shift more towards consumers, giving them additional data points to really understand that this is a vehicle and a VIN number that went through an additional loop of 15, 18-point inspection, which, by the way, the dealer adhered to and signed off. That's the difference. It's more consumer-facing as opposed to just price labeling.

Speaker #4: From a dealer's perspective, to then put it onwards to a consumer-facing potential sale listing. Now, what this does today—our focus is really on guiding consumers—so it's a shift more towards consumers, giving them additional data points to really understand that this is a vehicle and a VIN number that went through an additional loop of 15 to 18 points of inspection, which, by the way, the dealer adhered to and signed off.

Speaker #4: So that's the difference. It's more consumer-facing as opposed to just price labeling.

Speaker #5: So I don't want to I know I only have two questions, but I just want to be clear. In order to do a verified, have this program, the dealer does have to do some kind of certified inspection and guarantee that inspection before for the purchaser of the car?

Gary Prestopino: I know I only have two questions, but I just want to be clear. In order to do a verified, have this program, the dealer does have to do some kind of certified inspection and guarantee that inspection for the purchaser of the car?

Speaker #4: Yes. They need to go through a rigorous process, which is obviously part of the AccuTrade assets and then they can put it up online.

Tobias Hartmann: Yes. They need to go through a rigorous process, which is obviously part of the Accu-Trade assets, and then they can put it up online. That's correct. Thank you.

Tobi Hartmann: Yes. They need to go through a rigorous process, which is obviously part of the Accu-Trade assets, and then they can put it up online. That's correct. Thank you.

Speaker #4: That's correct. Thank you.

Gary Prestopino: Okay. Thank you.

Speaker #5: Okay. Thank you.

Speaker #1: Thank you. The next question comes from Naveen Khan from B. Riley, your line is now open.

Operator: Thank you. The next question comes from Naved Khan from B. Riley. Your line is now open.

Naved Khan: Great. Thanks so much, guys. Two questions from me. One maybe just on the website traffic between uniques and visits. Please, you said that you're focusing on higher quality traffic, not just the volume of traffic, which I understand. If I just look at marketing and sales as a percentage of revenue, that's up year-on-year. You're spending more money. Is it that we have to spend more money to acquire the high quality traffic? How should I understand that deleverage in the marketing line versus what you just spoke about in terms of quality trade-off? Then I have a follow-up.

Speaker #3: Great. Thanks so much, guys. Two questions from me. One, maybe just on the traffic, the website traffic between unique and visits. Please, you said that you're focusing on higher quality traffic, not just the volume of traffic, which I understand.

Speaker #3: But if I just look at sort of marketing and sales, as a percentage of revenue, that's up here on here. You're spending more money.

Speaker #3: So is it that we're have to spend more money to kind of acquire the high quality traffic? How should I understand that deal average in the marketing line versus what you just spoke about in the quality trade-off?

Speaker #3: And then I have a follow-up.

Speaker #4: Yeah. Good catch there. We anticipated that question. But there's something else that we are we're trying to catch up with and trying to have proper allocation, which is really call it brand.

Tobias Hartmann: Yeah. Good catch there. We anticipated that question. There's something else that we're trying to catch up with and trying to have proper allocation, which is really, call it brand. Remember, we still need some brand investment for the long-term interconnected strategy. We need to position this not only just a listings destination, but instead as a transaction enablement platform. The focus we just called out is really on the performance and growth marketing piece where we really focus on driving more value. Separately from that, we are continuing and actually we're spending money on positioning this right in terms of branding. That's an important part of the journey because we're here for long-term success. Again, that's why you see those numbers. Thank you.

Tobi Hartmann: Yeah. Good catch there. We anticipated that question. There's something else that we're trying to catch up with and trying to have proper allocation, which is really, call it brand. Remember, we still need some brand investment for the long-term interconnected strategy. We need to position this not only just a listings destination, but instead as a transaction enablement platform. The focus we just called out is really on the performance and growth marketing piece where we really focus on driving more value. Separately from that, we are continuing and actually we're spending money on positioning this right in terms of branding. That's an important part of the journey because we're here for long-term success. Again, that's why you see those numbers. Thank you.

Speaker #4: Remember, we still need some brand investments for the long-term interconnected strategy. So we need to position this not only just a listing destination, but instead as a transaction enablement platform.

Speaker #4: So the focus we just called out is really on the performance and growth marketing piece where we really focus on driving more value. Separately from that, we are continuing and actually we're spending money on positioning this right in terms of branding.

Speaker #4: And that's an important part of the journey because we're here for long-term success. So yes, that's why you see those numbers. Thank you.

Speaker #3: Okay. That's great. The second question I have is just on the verified listing. So it looks like you're creating a greater value proposition for the dealers that buy AccuTrade and ultimately that should drive sales for this product.

Naved Khan: Okay, that's great. The second question I have is just on the Verified Listings. It looks like you're creating a greater value proposition for the dealers that buy Accu-Trade, and ultimately that should drive sales for this product. Is that the right way I should be understanding this? Or are you just going to expand the Verified Listing to more dealers regardless of whether or not they're Accu-Trade customers?

Speaker #3: Is that the right way I should be understanding this? Or are you just going to expand the verified listing to more dealers regardless of whether or not they're AccuTrade customers?

Speaker #4: Yeah, good question too. It's only a shared. We started with the AccuTrade customers. Why? Because they're used to the procedures and the processes and obviously they're closer to our intentional shift of driving a differentiated listing and providing a different trust signal.

Tobias Hartmann: Yeah, good question, too. As Sonia shared, we started with the Accu-Trade customers. Why? Because they're used to the procedures and the processes, and obviously they're closer to our intentional shift of driving a differentiated listing and providing a different trust signal. That's the current testing. Again, this is early innings. We're only out there for a couple of weeks, but the intent is to then also make this available to a broader audience of dealers. We are seeing very positive and very encouraging signals right now. Also, to be fair, we are learning because these are the power users, and they're giving us incredibly fundamental and good sound feedback on how we can further improve that. In summary, correct, we started with Accu-Trade customers only, and also only a subgroup of those. We're getting their feedback. We're monitoring.

Tobi Hartmann: Yeah, good question, too. As Sonia shared, we started with the Accu-Trade customers. Why? Because they're used to the procedures and the processes, and obviously they're closer to our intentional shift of driving a differentiated listing and providing a different trust signal. That's the current testing. Again, this is early innings. We're only out there for a couple of weeks, but the intent is to then also make this available to a broader audience of dealers. We are seeing very positive and very encouraging signals right now. Also, to be fair, we are learning because these are the power users, and they're giving us incredibly fundamental and good sound feedback on how we can further improve that. In summary, correct, we started with Accu-Trade customers only, and also only a subgroup of those. We're getting their feedback. We're monitoring.

Speaker #4: That's the current testing. Now again, this is early innings. We only out there for a couple of weeks, but the intent is to then also make this available to a broader audience of dealers.

Speaker #4: And we're seeing very positive and very encouraging signals right now, but also to be fair, we are learning because these are the power users and they're giving us incredibly fundamental and good sound feedback on how we can further improve that.

Speaker #4: So in summary, correct, we started with AccuTrade customers only and also only a subgroup of those. We're getting their feedback. We're monitoring. We're finessing the product, but the intent is to roll it out and expand it and make it available to other dealers.

Tobias Hartmann: We are finessing the product. The intent is to roll it out and expand it and make it available to other dealers. Thank you.

Tobi Hartmann: We are finessing the product. The intent is to roll it out and expand it and make it available to other dealers. Thank you.

Speaker #4: Thank you.

Speaker #3: Thanks.

Naved Khan: Thanks.

Speaker #1: Thank you. The next question comes from Alejandro Nuno from UBS. Your line is now open.

Operator: Thank you. The next question comes from Alejandro Nuno from UBS. Your line's now open.

Speaker #2: Hi, good morning. Maybe you can just sort of help us out with the guidance. The EBITDA guide basically implies margins are relatively flat, quarter over quarter, but it sounds like you continue to make good progress on optimizing the cost structure and expect sort of return growth in OEM revenue.

Alejandro Nuno: Hi, good morning. Maybe you can just sort of help us out with the guidance. The EBITDA guide basically implies margins are relatively flat quarter-over-quarter, it sounds like you continue to make good progress on optimizing the cost structure, and expect sort of return growth in OEM revenue. Like, why are margins sort of flat quarter-over-quarter? Then maybe sort of on top of that, the Q4 margin sort of implies close to sort of 31%. What drives, I guess, the step up from Q3 to Q4?

Speaker #2: So why are margins sort of flat quarter over quarter? And then maybe sort of on top of that, the fourth quarter margin sort of implies close to sort of 31%.

Speaker #2: What drives, I guess, the step up then from Q4?

Speaker #6: Yeah, no, thank you for the question. We're happy with our EBITDA performance on a year-to-date basis. As you heard, we've kind of reaffirmed the full-year guide.

Sonia Jain: Yeah, no, thank you for the question. We're happy with our EBITDA performance on a year-to-date basis. As you heard, we've kind of reaffirmed the full-year guide. I think the shape of the year maybe looks a little bit different from a margin perspective than you may have originally anticipated, we're definitely committed to finding those ongoing efficiencies. Some of them unlocked in Q2 with the changes that we made to streamline the organization. You've also heard us talk about the importance of innovation and driving forward growth in the business. We're fairly committed to identifying and reallocating resources as needed to deliver on the growth profile. We would also expect as innovation takes hold, as we get more of these efficiencies, as we see revenue growth, we should see more scale in our EBITDA numbers as we progress quarter-over-quarter.

Speaker #6: I think the shape of the year maybe looks a little bit different from a margin perspective than you may have originally anticipated. But we're definitely committed to finding those ongoing efficiencies, some of them unlocked in Q2 with the changes that we made to streamline the organization.

Speaker #6: But you've also heard us talk about the importance of innovation and driving forward growth in the business. So we're fairly committed to identifying and reallocating resources as needed to deliver on the growth profile.

Speaker #6: And we would also expect as innovation takes hold, as we get more of these efficiencies, as we see revenue growth, we should see more scale in our EBITDA numbers as we progress quarter over quarter.

Speaker #2: Got it. Thanks for that color. And maybe just sort of one more follow-up if I can. And sorry if I missed this, but on the new premium plus package, you highlighted that you're targeting sort of 15% by the end of the year.

Alejandro Nuno: Got it. Thanks, Eklavya. Maybe just sort of one more follow-up if I can. Sorry if I missed this, on the new Premium Plus package, you highlighted that you're targeting sort of 15% by the end of the year. Can you just give us an update of where you stand now?

Speaker #2: Can you just give us an update of where you stand now?

Sonia Jain: We're making good progress. We're midway through the year, I think we're seeing a lot of momentum in terms of those sales. Premium Plus was the fastest growing of our three packages in Q2. As we continue to add more features and improve the interconnectivity of our Marketplace experience, we believe a lot of that value will accrete to the Premium Plus package.

Speaker #6: We're making good progress. We're midway through the year, and I think we're seeing a lot of momentum in terms of those sales. Premium plus was the fastest growing of our three packages in Q2.

Speaker #6: And as we continue to add more features and improve the interconnectivity of our marketplace experience, we believe a lot of that value will accrete to the premium plus package.

Alejandro Nuno: Just the penetration number by chance?

Sonia Jain: We're still fixed on delivering the 15% by the end of the year.

Speaker #6: We're still fixed on delivering the 15% by the end of the year.

Speaker #2: Do you have a penetration number for the quarter so far, or where you stand right now?

Alejandro Nuno: Do you have a penetration number for the quarter so far? Where you stand right now?

Sonia Jain: We're basically at double digits or close to double-digit penetration.

Speaker #6: We're basically at double digits or close to double digit penetration.

Speaker #2: Great. Thank you so much. I'll pass it on.

Alejandro Nuno: Great. Thank you so much. I'll pass it on.

Speaker #1: Thank you. The next question comes from Rajat Gupta from JP Morgan. Please go ahead.

Operator: Thank you. The next question comes from Rajat Gupta from JP Morgan. Please go ahead.

Speaker #7: Hi, good morning. This is Josh on for Rajat Gupta. Thanks for taking our questions. I just wanted to start off with one on the FTC's push around dealer pricing transparency.

[Analyst] (J.P. Morgan): Hi. Good morning. This is Josh on for Rajat Gupta. Thanks for taking our questions. I just wanted to start off with one on the FTC's push around dealer pricing transparency. I was just wondering if you could expand on how you've changed the platform to just adhere to that increasing pricing transparency standard. You sit a step removed since dealers do the advertising. Does all-in pricing play to a marketplace built on trust, or does it create somewhat of a friction for your dealers? Is your approach any different from that that is employed by your peers? Thanks, and I have a quick follow-up.

Josh Milberg: Hi. Good morning. This is Josh on for Rajat Gupta. Thanks for taking our questions. I just wanted to start off with one on the FTC's push around dealer pricing transparency. I was just wondering if you could expand on how you've changed the platform to just adhere to that increasing pricing transparency standard. You sit a step removed since dealers do the advertising. Does all-in pricing play to a marketplace built on trust, or does it create somewhat of a friction for your dealers? Is your approach any different from that that is employed by your peers? Thanks, and I have a quick follow-up.

Speaker #7: I was just wondering if you could expand on how you've changed the platform to just adhere to that increasing pricing transparency standard. You said a step removed since dealers do the advertising.

Speaker #7: So does all-in pricing play to a marketplace built on trust, or does it create somewhat of a friction for your dealers? And is your approach any different from that that is employed by your peers?

Speaker #7: Thanks, and I have a quick follow-up.

Sonia Jain: We've tried to take a role in helping dealers ensure that they're able to get their information out there and be trusted partners to consumers. If you think about our vision for Marketplace, it is embedded in trust, transparency. We've been supporting them through this process, encouraging compliance, and just better information, right? Because when the consumer understands what they have to pay before they walk into a dealership, it reduces the friction of the transaction, right? It increases lead to sale conversion. We feel like we're taking the right steps.

Speaker #6: We tried to take a role in helping dealers ensure that they're able to get their information out there and be trusted partners to consumers.

Speaker #6: If you think about our vision for Marketplace, it is embedded in trust and transparency, and so we've been supporting them through this process, encouraging compliance, and just better information, right?

Speaker #6: Because when the consumer understands what they have to pay, before they walk into a dealership, it reduces the friction of the transaction, right? It increases lead-to-sale conversion.

Speaker #6: So we feel like we're taking the right steps.

Speaker #7: Understood. That's very helpful. And then just as a quick follow-up, could we get an update on where Cost.com's dealer-to-dealer wholesale initiative stands just around dealer club with AccuTrade connected dealers not yet seeing meaningful upward pressure?

[Analyst] (J.P. Morgan): Understood. That's very helpful. Just as a quick follow-up, could we get an update on where Cars.com's dealer to dealer wholesale initiative stand just around DealerClub with Accu-Trade connected dealers not yet seeing meaningful upward pressure? Just curious how that flywheel starts turning and what's the unlock that gets that ecosystem to compound. Thank you.

Josh Milberg: Understood. That's very helpful. Just as a quick follow-up, could we get an update on where Cars.com's dealer to dealer wholesale initiative stand just around DealerClub with Accu-Trade connected dealers not yet seeing meaningful upward pressure? Just curious how that flywheel starts turning and what's the unlock that gets that ecosystem to compound. Thank you.

Speaker #7: Just curious how that flywheel starts turning and what's the unlock that gets that system or that ecosystem to compound. Thank you.

Speaker #4: Yeah, currently we are focused on, as we just laid out, on really taking some of the AccuTrade assets and making them more interconnected. So that's the first step.

Tobias Hartmann: Yeah. Currently, we are focused on, as we just laid out, on really taking some of the Accu-Trade assets and making them more interconnected. That's the first step. That's plenty of stuff to chew on, we're going to take it step by step. The Dealer Verified Listings program, as we just launched it, is going to keep us busy for quite some months. We'll give you more updates on the other stuff, but that's the focus. That's the current focus right now. The other part that we're really embedding and making it more connected is also anything that's related to our Premium Plus features. We've developed a stack of new features that are going to be launched as part of our rollout and our future subscription services.

Tobi Hartmann: Yeah. Currently, we are focused on, as we just laid out, on really taking some of the Accu-Trade assets and making them more interconnected. That's the first step. That's plenty of stuff to chew on, we're going to take it step by step. The Dealer Verified Listings program, as we just launched it, is going to keep us busy for quite some months. We'll give you more updates on the other stuff, but that's the focus. That's the current focus right now. The other part that we're really embedding and making it more connected is also anything that's related to our Premium Plus features. We've developed a stack of new features that are going to be launched as part of our rollout and our future subscription services.

Speaker #4: That's plenty of stuff to chew on. So we want to take it step by step. And the dealer verified listings program, as we just launched it, is going to keep us busy for quite some months.

Speaker #4: So we'll give you more updates on the other stuff, but that's the focus. That's the current focus right now. The other part that we're really embedding and making more connected is also anything that's related to our Premium Plus features.

Speaker #4: So we've developed a stack of new features that are going to be launched as part of our rollout in a future subscription services. But again, purely to talk about in public, but there's a lot of work behind closed doors.

Tobias Hartmann: Again, too early to talk about in public, there's a lot of work behind closed doors, so stay tuned. Thanks.

Tobi Hartmann: Again, too early to talk about in public, there's a lot of work behind closed doors, so stay tuned. Thanks.

Speaker #4: So just stay tuned. Thanks.

Speaker #7: Understood. Thanks and good luck.

[Analyst] (J.P. Morgan): Understood. Thanks. Good luck.

Josh Milberg: Understood. Thanks. Good luck.

Speaker #1: Thank you. And no further questions that came through. This concludes our conference call for today. Thank you all for participating. You may now disconnect.

Operator: Thank you. No further questions that came through. This concludes our conference call for today. Thank you all for participating. You may now disconnect.

Q2 2026 Cars.com Inc Earnings Call

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