Investor Relations May 2021
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Investor Relations May 2021
Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the federal securities laws. All statements other than statements of historical facts are forward-looking statements. Forward-looking statements include information concerning the impact of the COVID-19 pandemic on our industry, our dealer customers and our results of operations, our business strategies, strategic alternatives, plans and objectives, market potential, outlook, trends, future financial performance, planned operational and product improvements, potential strategic transactions, liquidity, including draws from our revolving credit facility, expense management and other matters and involve known and unknown risks that are difficult to predict. As a result, our actual financial results, performance, achievements, strategic actions or prospects may differ materially from those expressed or implied by these forward-looking statements. These statements often include words such as “believe,” “expect,” “project,” “anticipate,” “outlook,” “intend,” “strategy,” “plan,” “estimate,” “target,” “seek,” “will,” “may,” “would,” “should,” “could,” “forecasts,” “mission,” “strive,” “more,” “goal” or similar expressions. Forward-looking statements are based on our current expectations, beliefs, strategies, estimates, projections and assumptions, based on our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments, current developments regarding the COVID-19 pandemic and other factors we think are appropriate. Such forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by the Company and its management based on their knowledge and understanding of the business and industry, are inherently uncertain. These statements are expressed in good faith and we believe these judgments are reasonable. However, you should understand that these statements are not guarantees of strategic action, performance or results. Our actual results and strategic actions could differ materially from those expressed in the forward-looking statements. Given these uncertainties, forward-looking statements should not be relied on in making investment decisions. Comparisons of results between current and prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data. Whether or not any such forward-looking statement is in fact achieved will depend on future events, some of which are beyond our control. Forward-looking statements are subject to a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results and strategic actions to differ materially from those expressed in the forward-looking statements contained in this presentation. For a detailed discussion of many of these and other risks and uncertainties, see our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and our other filings with the Securities and Exchange Commission, available on our website at investor.cars.com or via EDGAR at www.sec.gov. All forward-looking statements contained in this presentation are qualified by these cautionary statements. You should evaluate all forward-looking statements made in this presentation in the context of these risks and uncertainties. The forward-looking statements contained in this presentation are based only on information currently available to us and speak only as of the date of this presentation. We undertake no obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, or changes in future operating results over time or otherwise. The forward-looking statements in this presentation are intended to be subject to the safe harbor protection provided by the federal securities laws.
Definitions: Non-GAAP Financial Measures This presentation discusses Adjusted EBITDA, Adjusted EBITDA Margin, and Free Cash Flow. These financial measures are not prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). These financial measures are presented as supplemental measures of operating performance because we believe they provide meaningful information regarding our performance and provide a basis to compare operating results between periods. In addition, we use Adjusted EBITDA as a measure for determining incentive compensation targets. Adjusted EBITDA also is used as a performance measure under our credit agreement and includes adjustments such as the items defined below and other further adjustments, which are defined in the credit agreement. These non-GAAP financial measures are frequently used by our lenders, securities analysts, investors and other interested parties to evaluate companies in our industry. For a reconciliation of the non-GAAP measures presented in this presentation to their most directly comparable financial measure prepared in accordance with GAAP, see “Non-GAAP Reconciliations” below. Other companies may define or calculate these measures differently, limiting their usefulness as comparative measures. Because of these limitations, these non-GAAP financial measures should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP. Definitions of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP financial measures are presented in the tables below. We define Adjusted EBITDA as net income (loss) before (1) interest expense, net, (2) income tax (benefit) expense, (3) depreciation, (4) amortization of intangible assets, (5) stock-based compensation expense, (6) unrealized mark-to-market adjustments and cash transactions related to derivative instruments, and (7) certain other items, such as transaction-related costs, severance, transformation and other exit costs and write-off and impairments of goodwill, intangible assets and other long-lived assets. Transaction-related costs are certain expense items resulting from actual or potential transactions such as business combinations, mergers, acquisitions, dispositions, spin-offs, financing transactions, and other strategic transactions, including, without limitation, (1) transaction-related bonuses and (2) expenses for advisors and representatives such as investment bankers, consultants, attorneys and accounting firms. Transaction-related costs may also include, without limitation, transition and integration costs such as retention bonuses and acquisition-related milestone payments to acquired employees, in addition to consulting, compensation and other incremental costs associated with integration projects. We define Free Cash Flow as net cash provided by operating activities less capital expenditures, including purchases of property and equipment and capitalization of internal-use software and website development costs.
Who We Are
Our Mission Driving The Future Of Automotive Retail Become the largest digital automotive marketplace and platform powering innovative solutions and frictionless omni-channel experiences for buyers and sellers
At the Heart of our Business is a
Vibrant Marketplace
Consumer Challenges The Solution Dealer Challenges
• Too many options • 600MM annual visits² • Growing customer
• Price opacity & distrust expectations
• 3.7MM new & used vehicle listings²
• Inconvenient, • Inefficient advertising
• Trusted, objective editorial content
broken shopping experience • Disruption from
• Price transparency & comparisons
• Gaps in online-to-offline online dealers
• 10MM+ vehicle, dealership & salesperson reviews
experience • Too many
disparate solutions
1500+ 42K+ Multiple
models/trims
Dealers¹ Automotive 30+
Digital OEMS
per year Destinations
We’re here to make car-buying simple
125.8K independent US car dealerships per 2020 Borrell Automotive Advertising Outlook report, and 16.6K franchised dealers per National Automobile Dealers Association
²As of Full Year/Q4 2020
Our Strategy Traffic Traffic Dealers Vehicle Listings More Traffic More Dealers A flywheel of dealers driving vehicle listings, vehicle listings driving traffic & data, traffic & data attracting Flywheel dealers defines our digital solutions platform
CARS is more than just a marketplace CARS enables local retail & helps dealers stay at the center of the automotive ecosystem Dealer Challenges ● Growing customer expectations ● Too many disparate “solutions” ● Inefficient advertising strategy and spending ● Disruption from online dealers
Durable Brand and Subscription Based Model
Yields Strong Recurring Revenue
Overview Revenue mix1 Target partners
• 18K+ dealer customers list new and used
inventory on Cars.com on a subscription basis
Direct • Solutions include Dealer Inspire website
● Cars.com products, FUEL in market video and
Dealer Inspire
85%
●
DealerRater review platform
● Dealer Rater
Conversations • Targeting market leading franchised dealers,
●
● FUEL dealer groups and independent dealers
42K+2
Dealers
• Monthly ARPD of $2,2641
$548mm
• Nearly all OEMs as well as auto adjacent 2020 Revenue
companies advertise with CARS
National • Long-term relationships cultivated
Advertising with target partners
13%
● Cars.com • Solutions range from performance marketing
Fuel
● to value-add solutions like lead generation, OEMs
CPO programs and FUEL in market video
Note: 2% of revenue is related to “Other Revenue” which consists of data-driven solutions and revenue partnerships; 1 Q4 2020;
2 25.8K independent US car dealerships in 2019 per 2020 Borrell Automotive Advertising Outlook report, and 16.6K franchised dealers as of June YTD 2020 per National Automobile Dealers Association
CARS Extending Beyond the Marketplace
Durable, Category Leading Brand Supporting a 20+ Year History of Innovative Solutions
2021
2020
• Will complete tech
replatforming
2019 • Launches FUEL In- which will allow for
Market Video nimble product
development
2018 • Completes all
affiliate conversions; • Repositions the
business on a • Will support a
dealers served
growth trajectory frictionless end-to-
2017 • Acquires Dealer by direct sales team
Inspire, end transaction
a disruptive, • Selected by GM • Accelerates online from search to
2016 innovative digital as semi-exclusive selling tools and signature for both
Cars.com spins support for dealers our customers and
solutions provider website provider
off as a publicly affected by COVID-19 consumers
available to GMs
2014 traded company
Acquires • Launches Cars 4,000+ dealers
under ticker • Refinances capital
DealerRater Social, and AI Chat
NYSE: CARS structure, increasing
1998 Classified • Launches
• Accelerates AutoCorrected flexibility for organic
Ventures sells
transition of and Roxanne and inorganic
Cars.com to
Cars.com former affiliates investments
Gannett, Inc.
founded McClatchy & troncCARS at a Glance
Our Company Today: Scaled Dealer Solutions Platform with Unparalleled Brand
$548MM $156MM / 28% $122MM
FY 2020 FY 2020 FY 2020
Revenue Adj. EBITDA / margin Free cash flow
CARS
has scale
600MM 18,372 Nearly all
FY 2020 visits Dealer customers⁶ of OEMs are customers
CARS is ~85% 10MM 73%
influential Visitors plan to purchase
within 6 months1
reviews of our traffic is organic2
#1
CARS is the #1 #1
gold standard Brand awareness3
Top downloaded online
auto marketplace app4
Highest rated mobile platform5
Note: See the appendix for a reconciliation of Non-GAAP financial measures.
1 CARS internal data as of June 2020; 2 Q4 2020: Direct + App + SEO; 3 Millward Brown as of December 2020; total brand awareness shown among CARS’ competitive set;
4Downloads versus peers, per App Annie as of December 2020; 5 CARS has the highest Apple App Store rating among peers at 4.8/5.0 as of October 2020 ⁶As of 12/31/2020Investment Highlights
01. Significant Headroom in Large and Fragmented Addressable Market
02. Leading Brand¹ with Strong Organic Traffic
03. Well Positioned to Benefit from Accelerating Shift to Digital Automotive Solutions
04. Resilient Business Model With Attractive Free Cash Flow Profile and Strong Balance Sheet
05. Experienced Management Team
06. Well Positioned to Lead into the Future of Digital Automotive Buying
¹Millward Brown as of December 2020; total brand awareness shown among CARS’ competitive set01 Significant Headroom in Large Addressable Market
Dealer TAM2
Significant
Headroom in Large 42k 26k 16k
Addressable Market
● With over 40k dealerships in the
U.S. we have ample room to
continue to grow our customer base
● Our large dealer base provides us
a platform to sell new products & solutions
All auto Independent Franchised
● Dealers typically subscribe to multiple dealerships dealerships dealerships
marketplaces in order to maximize the
visibility of their inventory Current CARS penetration1
1 12/31/2020; 2 25.8K independent US car dealerships in 2019 per 2020 Borrell Automotive Advertising Outlook report, and 16.6K franchised dealers as of June YTD 2020 per National Automobile Dealers Association
14Car Ownership Trends Remain Durable
Strong Demand for Car Ownership
SAAR: New Vehicle Sales (in millions) New Vehicle Sales, Unadjusted (in millions)
Source: U.S. Bureau of Economic Analysis Source: U.S. Bureau of Economic Analysis
15Dealers Spend 4X More on Digital Solutions2
Tapping into
More than Just
Advertising Budgets
2,500,000
2,000,000
WE CAPTURE LESS THAN 2%
OF U.S. AUTO ADVERTISING 1,500,000
● $33B is spent in Automotive Advertising 1,000,000
in the U.S. growing at 2% CAGR1
500,000
● $21B is spent in Digital,
0
projected to grow at a 4% CAGR1
Advertising: $0.6M Digital Marketing: $2.3M
● Typical dealer spends ~4x more on digital marketing services
than advertising
● Average Dealer Spends $2.9M/year
1. Based on Borrell Outlook 2020; 2 Based on Borrell Outlook 2020; Average spending for U.S. car dealer with 135 employees02 Leading Brand with Strong Organic Traffic
Strong Brand Drives Marketing Efficiencies
We Spend Half as Much in Advertising as our Largest Competitor
74% of Traffic Generated Organically
Cars.com is #1 in total brand awareness1
Q1 2021 CARS Traffic Breakdown
PAID DIRECT
26% 26%
APP SEO
22% 26%
1 Millward Brown as of August 2020; total brand awareness shown among CARS’ competitive set
18Strong Brand Supports Traffic Growth
Record 600MM visits in 2020
Cars.com Total Traffic
600MM
400MM
14%
CAGR
200MM
2017 2018 2019 2020
1903 Well Positioned to Benefit From Accelerating Shift to Digital Automotive Solutions
Solutions Connect Car Shoppers with Dealers
We Help our Customers, OEMs and Dealers, Reach Their Customers, Car Shoppers
Marketplace Cars Social FUEL-IMV DealerRater Dealer Inspire Conversations Online Shopper
Listings Websites
Allows dealers to Delivers video ads to Allows local car Powerful A.I. Provides consumers
power their own local in-market shoppers to discover, Award winning, messaging platform with advanced payment
Customized marketing
dynamic social ads shoppers on their meet and recommend custom designed that centralizes options, resulting in
and customer website platforms
acquisition solutions leveraging Cars.com’s device of choice a dealership’s team, supporting highly customer higher intent, higher
pure, first-party leveraging Cars.com’s improving our personalized digital communication, quality and faster-to-
audience data pure, first-party customers’ reputations campaigns improves quality and close leads for dealers.
audience data and building authentic speed of response
relationships time, and decreases
operating costs
DISCOVER & SHOP CONNECT BUYDealer Inspire Growth Supported by OEM Partnerships
Dealer Inspire Website Customers
Achieved
4,700
Website
Customers
22Dealer Inspire Growth Supported by OEM Partnerships
Conversations™ Units Live (Online Chat) Online Shopper™ Units Live (Digital Retailing)
27%
Penetration* 20%
Penetration*
1,250 1,000
25%
1,000 Penetration*
750
14%
Penetration*
750
500
500
250
250
0 0
12/31/19 3/31/20 6/30/20 9/30/20 12/31/20 12/31/19 3/31/20 6/30/20 9/30/20 12/31/20
* Penetration rates calculated as units/website customers
23MAXIMIZE ROI ON
IN-MARKET SHOPPERS
FUELing Future Growth and At any given time, a small
ARPD through New Products
percentage of households in a
market are serious about buying a
car — but we know who they are. By
leveraging audience data from the
most popular automotive
Unlock the power of in-market video marketplace, FUEL ads only target
and unprecedented audience targeting in-market shoppers
LAUNCH A FUEL
AUDIENCE TAKEOVER
• Subscription-like model connecting dealers We reach the target audience across
directly to in-market shoppers through a the devices and platforms they watch
video on every day.
customized video marketing platform FUEL analyzes the ad frequency
needed to move the needle in the
• Launched in February 2020 market, and takes over screens until
shoppers in the area can’t think of
anywhere else to buy a carCARS’ Innovative Solutions Promote At-Home Shopping
Supporting consumers desire to shop when, where & how they want to shop
Home Delivery &
Virtual Appointment Conversations
• Making dealer inventory • Advanced messaging solution instantly
accessible for home delivery connects customers to dealers 24/7
• Seamless texting between dealer
and customer, desktop and mobile,
and tracked in the dealer’s CRM
Keeping Sellers
Selling in a Socially
Distanced World
Online Shopper OEM Partnerships
• Seamless end-to-end • OEMs working directly with CARS
digital retailing solution editorial teams to deliver the most
relevant content in real time
• Enables saving, customizing
and comparing payments for • Support for virtual test drives, real-time
online listings in minutes incentives, and shopper guidance
2504 Resilient Business Model With Attractive Free Cash Flow Profile and Strong Balance Sheet
Substantial Liquidity and Financial Flexibility
Recurring • Subscription model
revenue • Diversified customer base
With our significant
cash flow, we plan to
• Asset Light
• Invest in internal innovation
Strong free • Minimal working capital needs
cash flow • De-lever our balance sheet
• Low cash taxes due to tax-deductible
intangible amortization, NOL & tax credits • Pursue opportunistic
M&A to accelerate growth
• $145mm term loan and $400mm notes1
Flexible and solid • $54mm cash1 & $230mm undrawn on
balance sheet revolving credit facility1
• 2.9x net leverage1
1 As of 3/31/21
27Recurring Subscription Revenue From Diversified Customer Base
Revenue Mix No One Customer Drives the Business1
$548mm
2020 Revenue 5% 25%
Includes marketplace
5% of CARS dealers 25% of CARS dealers
subscriptions and digital solutions (~1,000 dealers) (~5,000 dealers)
Generate ~20% of Generate ~60% of
Non-recurring 15% Subscriptions 85%
CARS Revenue CARS Revenue
1 Based on total number of dealers invoiced over the course of the twelve months ended August 2020
28Attractive Free Cash Flow Profile
Free Cash Flow conversion rate of 78% for Full Year 2020
$ in Millions
$40.0 120%
$35.0 100%
$30.0
80%
$25.0
$20.0 60%
$15.0
40%
$10.0
20%
$5.0
$- 0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2019 2019 2019 2019 2020 2020 2020 2020
Free Cash Flow % of Adjusted EBITDA
Reconciliations of non-GAAP financial measures can be found in the appendix of this presentation.
2905 Experienced Management Team
Led by an Experienced, Diverse Leadership Team
Alex Vetter Sonia Jain Doug Miller Jim Rogers D.V. Williams Joe Chura
Chief Executive Chief Financial Chief Revenue Chief Legal Chief People Co-Founder /
Officer Officer Officer Officer Officer CEO of Dealer Inspire
Jandy Tomy Dean Evans Marita Thomas Fred Lee Brooke Skinner Ricketts
Vice President, Executive Chief Communications Chief Technology Chief Experience Officer
Treasurer Vice President Officer OfficerDriving Long-term Value Creation through ESG
CARS has made significant progress on various Environmental, Social and
Governance initiatives with plans to continue momentum into 2021 and beyond
Environmental Social Governance
● Online marketplace business model ● Established DE&I metrics tied to ● Added ESG oversight by
created to replace environmentally Executive Compensation program Nominating & Governance Committee
disruptive print products ● Established partnerships with NAMAD1 ● Established DE&I metrics to influence
● Transitioning to AWS cloud in 2021 will and Women in Auto to further the CARS Executive Team’s
reduce energy footprint representation in the industry compensation
● Offering tools to help shoppers filter for ● Monitoring employee satisfaction with ● Committed to increased Board diversity
hybrids and electric vehicles biannual surveys that garner over 80% ● Implemented best practices for our
● Recycling programs are in place to employee participation Board of Directors, including:
reduce waste ● Reshaped talent acquisition practices to ● 90% Board independence
further encourage diverse hiring ● 100% independent committees
● Increased career development &
training by at least 25%, including
offering Unconscious Bias training
quarterly
● Established Employee Resource Groups
& mentorship program
1 NAMAD: National Association of Minority Automobile Dealers
3206 Well Positioned to Lead into the Future Of Digital Automotive Buying
2021 Strategy: Building Blocks for Our Future
Best-in-Class Brand Product Solutions to Efficient Technology Industry-Leading
and Consumer Help Customers Sell Systems to Speed Sales and
Experience More Cars Innovation Customer Support
SUSTAINABLE MARKET LEADERSHIPFinancial Snapshot
KPIs: Dealer Customers and Monthly ARPD Trends
Multiple Levers to Grow Revenue
Dealer Customers Average Monthly ARPD
COVID
COVID
impact
impact
36Revenue and Adjusted EBITDA performance
Financials Strengthening
$ in millions
Revenue Adjusted EBITDA
$180 $60 40%
35%
160 50
30%
140 40
25%
120 30 20%
15%
100 20
10%
80 10
Q1 Q2 Q3 Q4 5%
0 0%
2019 2020
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2019 2019 2019 2019 2020 2020 2020 2020
Adj. EBITDA % of Revenue
Reconciliations of non-GAAP financial measures can be found in the appendix of this presentation.
37Q1 2021 Q2 2020
Strong TOTAL LIQUIDITY1 $283.7MM $217.3MM
Liquidity CASH FLOWS FROM OPERATING ACTIVITIES $50.4MM $28.9MM
Position
and Free FREE CASH FLOW $44.1MM $23.1MM
Cash Flow CASH $53.7MM $187.3MM
Q1 2021
DEBT $545.0MM $799.7MM
NET LEVERAGE 2.9x 3.7x
1. Includes cash plus availability under revolving credit facility.
Reconciliations of Non-GAAP financials measures to the relevant GAAP measure can be found in the appendix of this presentation.Investment Highlights
01. Significant Headroom in Large and Fragmented Addressable Market
02. Leading Brand¹ with Strong Organic Traffic
03. Well Positioned to Benefit from Accelerating Shift to Digital Automotive Solutions
04. Resilient Business Model With Attractive Free Cash Flow Profile and Strong Balance Sheet
05. Experienced Management Team
06. Well Positioned to Lead into the Future of Digital Automotive Buying
¹Millward Brown as of December 2020; total brand awareness shown among CARS’ competitive setAppendix
Non-GAAP Reconciliations (unaudited and in thousands)
Non-GAAP Reconciliations (unaudited and in thousands)
2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4 2021 Q1
Net cash provided by operating activities $ 38,389 $ 12,366 $ 29,795 $ 20,934 $ 28,892 $ 28,737 $ 39,237 $ 41,750 $ 50,362
Purchase of property and equipment (3,363) (5,991) (6,055) (5,848) (5,755) (2,970) (3,878) (4,109) (6,219)
Non-GAAP
Free Cash Flow $ 35,026 $ 6,375 $ 23,740 $ 15,086 $ 23,137 $ 25,767 $ 35,359 $ 37,641 $ 44,143
% of Adjusted EBITDA 91% 15% 52% 38% 66% 111% 72% 78% 92%
Reconciliations
(unaudited and in thousands)Definitions: Key Metrics
Traffic. Traffic is fundamental to our business. Traffic to the CARS network of websites and mobile apps provides value to our
advertisers in terms of audience, awareness, consideration and conversion. In addition to tracking traffic volume and sources, we
monitor activity on our properties, allowing us to innovate and refine our consumer-facing offerings. Traffic is defined as the number
of visits to CARS desktop and mobile properties (responsive sites and mobile apps), measured using Adobe Analytics. Traffic does
not include traffic to Dealer Inspire websites. Traffic provides an indication of our consumer reach. Although our consumer reach
does not directly result in revenue, we believe our ability to reach in-market car shoppers is attractive to our dealer customers and
national advertisers.
Average Monthly Unique Visitors ("UVs"). Growth in unique visitors and consumer traffic to our network of websites and mobile
apps increases the number of impressions, clicks, leads and other events we can monetize to generate revenue. We define UVs in a
given month as the number of distinct visitors that engage with our platform during that month. Visitors are identified when a user
first visits an individual CARS property on an individual device/browser combination or installs one of our mobile apps on an
individual device. If a visitor accesses more than one of our web properties or apps or uses more than one device or browser, each
of those unique property/browser/app/device combinations counts toward the number of UVs. UVs do not include Dealer Inspire
UVs. We measure UVs using Adobe Analytics.
Dealer Customers. Dealer Customers represent dealerships using our products as of the end of each reporting period. Each
physical or virtual dealership location is counted separately, whether it is a single-location proprietorship or part of a large,
consolidated dealer group. Multi-franchise dealerships at a single location are counted as one dealer.
Average Revenue Per Dealer ("ARPD"). We believe that our ability to grow ARPD is an indicator of the value proposition of our
products. We define ARPD as Dealer revenue, excluding digital advertising services, during the period divided by the monthly
average number of Dealer Customers during the same period.You can also read
