What changed in this filing

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Item 1. Business

2025-02-27 compared with 2024-02-22 · 64 added, 66 removed, 149 unchanged (47% of the section changed)

Cars.com Inc., d/b/a Cars Commerce Inc., ("we" or "Cars Commerce") is an audience-driven technology company empowering the automotive industry.

We simplify everything about car buying and selling with powerful products, solutions and AI-driven technologies that span pretail, retail and post-sale activities – enabling more efficient and profitable retail operations.

Cars Commerce is an audience-driven technology company empowering the automotive industry.

We aim to simplify everything about car buying and selling with powerful products, solutions and machine learning model-driven artificial intelligence technologies that span pretail, retail and post-sale activities – enabling more efficient and profitable retail operations.

The Cars Commerce platform is organized around four industry-leading brands:

the flagship automotive marketplace and dealer reputation site Cars.com, award-winning digital retail technology and marketing services from Dealer Inspire, essential trade-in and appraisal technology from AccuTrade, and exclusive in-market media solutions from the Cars Commerce Media Network.

our flagship automotive marketplace and dealer reputation site Cars.com, award-winning digital retail technology and marketing services from Dealer Inspire, essential trade-in and appraisal technology from AccuTrade and exclusive in-market media solutions from the Cars Commerce Media Network.

Established in 1998, we have a history of empowering shoppers with the data, resources and digital tools needed to make informed buying decisions and seamlessly connect with automotive retailers.

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Buying a car is one of life’s most significant and researched decisions.

Consumers are challenged with makes, models and trim-levels and opaque, yet negotiable prices, and gaps in the online-to-offline shopping experience, adding complexity to an often overwhelming decision-making process.

Consumers are challenged with makes, models and trim-levels and opaque, yet negotiable prices, and gaps in the online-to-offline shopping experience, all of which add complexity to an often overwhelming decision-making process.

Shoppers are seeking a more streamlined, simplified automotive retail experience.

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In addition, our expert editorial reviews and news and research publications aid shoppers in their purchase journey.

Recently, we also added features like Instant Finance to help consumers better understand their total cost of ownership, including financing fees.

With over 35% of car shoppers also seeking to trade-in their vehicle, Instant Offer, allows them to understand the value of their vehicle before leaving the comfort of their home.

We also include features like Instant Finance to help consumers better understand their total cost of ownership, including financing fees.

With over 30% of car shoppers also seeking to sell their vehicle, Instant Offer allows them to understand the value of their vehicle before leaving the comfort of their home.

Overall, our consumer experience is focused on reducing friction, improving speed and delivering powerful results through pricing, financing, comparison shopping, research and communication tools that empower shoppers.

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We complement our marketplace products with digital solutions, including websites and trade-in and appraisal technology, and media offerings powered by our exclusive in-market media network.

Internal analysis from 2023 has shown that increasing adoption of the Cars Commerce platform has allowed dealers to improve their vehicle turn time by up to 20%.

Importantly, we believe that many of the tools we have built for consumers, particularly those that support financing and trade-in valuation, help our dealer customers and OEMs by providing them with more qualified, ready-to-transact leads and reduce points of friction that can often arise in the purchase journey.

For example, website hosting customers that also have a marketplace subscription get approximately 40% more connections to their website, in addition to the associated marketplace leads they receive, as compared to those without marketplace.

Additionally, dealers that have an active AccuTrade solution with marketplace have approximately 90% more marketplace and Instant Offer leads.

Importantly, we believe that many of the tools we have built for consumers, particularly those that support financing and trade-in valuation, help our dealer customers and OEMs by providing them with more qualified, ready-to-transact leads and reducing points of friction that can often arise in the purchase journey.

Industry Dynamics.

As an audience-driven technology company, Cars Commerce is focused on helping our customers, primarily dealers, drive profitable vehicle sales.

After several years of margin compression, more recently dealers have experienced an increase in margins driven by limited new vehicle inventory coupled with strong consumer demand.

More recently dealers have experienced compressed margins, as well as improved supply and market normalization.

Additionally, during this time, consumer expectations on their digital purchase journey have only increased.

As a result, dealers seeking to build a sustainable advantage are investing more in their websites and technology solutions to drive operational efficiency while supporting shoppers in their preferred

purchase channels (i.e., online, offline or both).

We believe we are the first truly integrated platform, providing a comprehensive suite of sales-oriented products and solutions that support dealers' local retail operations.

We believe we are

the first truly integrated platform, providing a comprehensive suite of sales-oriented products and solutions that support dealers' local retail operations.

Our interconnected platform is organized around four core capabilities:

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• Marketplace.

Central to our platform is Cars.com, the most recognized marketplace brand.

We believe the marketplace is critical to the pretail experience, allowing OEMs and dealers to merchandise their inventory to our 26 million average shoppers each month in 2023.

Importantly, over 60% of our traffic comes to us organically, allowing us to provide our customers with a truly complementary and unduplicated audience.

Our marketplace packages include reputation management technology and digital financing tools, such as Instant Finance.

Customers using our upper-tier packages experienced a double-digit improvement in inventory turn time.

For subscribing dealers, AccuTrade’s Instant Offer is directly integrated into the marketplace experience, giving them access to in-market consumers who are ready to trade-in their vehicle for a new one.

More recently, we have added the Your Garage feature to Cars.com, allowing consumers to add and save vehicles to their virtual Garage and track the Cars.com Market Value of their current vehicle.

Cars.com Market Value leverages our Marketplace retail demand data to help consumers identify the best time to sell or trade-in their vehicle.

Central to our platform is Cars.com, the most recognized automotive marketplace brand.

We believe the marketplace is critical to the pretail experience, allowing OEMs and dealers to merchandise their inventory to our 26 million average monthly shoppers each month in 2024.

Importantly, approximately 60% of our traffic comes to us organically, allowing us to provide our customers with a truly complementary and unduplicated audience.

Our marketplace packages include reputation management technology and digital financing tools, and dealers using our upper-tier packages experienced a double-digit improvement in inventory turn time.

For subscribing dealers, AccuTrade’s Instant Offer is directly integrated into the Cars.com experience, giving them access to in-market consumers who are ready to trade-in their vehicle for a new one.

We also have Your Garage as a feature of Cars.com, allowing consumers to add and save vehicles to their virtual Garage and track the Cars.com Market Value of their current vehicle.

Cars.com Market Value leverages our retail demand data to help consumers identify the best time to sell or trade-in their vehicle.

• Digital Experience.

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Built on a customizable platform and designed with user behavior data, we believe our websites are set apart by the advanced technologies that drive modern consumers toward purchase decisions.

Today, we host the digital storefronts for approximately 7,300 dealers in the U.S.

In 2023, we acquired D2C Media Inc.

("D2C Media"), a leading automotive technology and digital solutions provider in Canada.

D2C Media also serves dealer customers with website, media services and other technology solutions that help dealers increase sales velocity and measure impact.

Today, we host the digital storefronts (websites) for approximately 7,600 dealers in the U.S.

o Digital retailing solutions.

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• Trade & Appraisal.

AccuTrade is a powerful data and technology solution that is integrated into both the Cars.com marketplace and Dealer Inspire websites.

Leveraging wholesale and retail data sources, AccuTrade provides dealers with vehicle valuation and appraisal technology to efficiently identify and source the exact vehicles they require.

AccuTrade leverages onboard diagnostic (OBD) data to automatically adjust vehicle value based on the specific vehicle being analyzed and quickly delivers a tailored, consumer-facing condition report.

It provides transparency to consumers while saving dealers an average of over $600 per vehicle on internal vehicle repairs.

Additionally, through AccuTrade Instant Offer, consumers can obtain instant and transparent cash offers for their specific VINs via our dealer websites, as well as Cars.com.

And if ready to sell or trade-in, consumers can find the best buyer for their vehicle.

AccuTrade uses real-time market data and diagnostic scans to determine the right trade-in offer for every VIN in minutes, increasing dealer access to high quality used vehicle inventory and improving dealer profitability through reconditioning loss avoidance and operations efficiency, and while creating transparency for the consumer in the trade-in process, which is often a point of friction.

AccuTrade leverages retail and wholesale data and onboard diagnostic scanner data to automatically adjust the vehicle value based on the specific vehicle being analyzed, with approximately 30% greater accuracy than legacy valuation providers.

It quickly delivers a tailored, consumer-facing condition report that provides transparency to consumers while saving dealers an average of approximately $700 in reconditioning costs per vehicle.

AccuTrade's consumer website application is seamlessly integrated into Cars.com and dealer websites, allowing consumers to obtain instant and transparent cash offers for their specific VINs.

• Cars Commerce Media Network.

A commerce media network created exclusively for automotive, Cars Commerce Media Network allows local and national customers alike to reach proven in-market and in-context consumers to accelerate the path to purchase.

Our newest media product, VIN Performance Media, resulted in approximately 80% more users to a dealer site from Cars.com and over a 60% increase in dealer site conversions.

In addition, when OEMs advertise with Cars Commerce Media Network, we see impact throughout the consumer digital shopping experience.

When one of our OEM partners purchased a prominent advertising sponsorship, we observed increased consumer engagement on Cars.com (searches and vehicle page views), traffic to their dealers' websites, and a double digit lift in conversions on those dealer websites during the sponsorship period.

o Display advertising.

Our display advertising products enable dealers and OEMs to extend their reach and efficiently access our large audience of in-market car shoppers.

When OEMs advertise with Cars Commerce Media Network, we see impact throughout the consumer digital shopping experience.

double digit lift in conversions on those dealer websites during the sponsorship period.

The product suite for dealers includes four turnkey solutions:

o Cars Social.

Cars Social allows dealers to target and serve native advertisements displaying real-time inventory to in-market car shoppers on Facebook and Instagram by leveraging our valuable audience data.

This solution is also available to OEMs.

o VIN Performance Media.

VIN Performance Media utilizes advanced machine-learning to automatically optimize all aspects of the media campaign, including audience targeting, real-time inventory, and ad placement across search, social, and display.

By improving traffic to dealer vehicle details pages, VIN Performance Media increases the inventory turn rate.

o In-Market Video and In-Market Display.

In-Market Video provides OEMs and dealers with the opportunity to pinpoint serious, ready-to-buy shoppers geographically on their screen of choice via social media platforms, streaming apps and connected TV.

This targeted approach drives high advertising efficiency for customers and compares favorably to the high-cost broadcast television solutions that dealers and OEMs have historically relied on.

Our In-Market Display products enable dealers and OEMs to extend their reach and efficiently access our large audience of in-market car shoppers.

The geographically targeted advertising served on our Cars.com website and mobile app enables our customers to increase brand awareness and promote inventory.

o In-Market Video.

In-Market Video provides OEMs and dealers with the opportunity to pinpoint serious, ready-to-buy shoppers geographically across Cars.com’s in-market car shopping audience of over 26 million average monthly shoppers on their screen of choice via social media platforms, streaming apps and connected TV.

This targeted

approach drives high advertising efficiency for customers and compares favorably to the high-cost broadcast television solutions that dealers and OEMs have historically relied on.

o Social selling.

We are pioneers in the use of social media platforms to sell cars by launching multiple solutions to target and connect with in-market car shoppers on social media platforms, expanding their opportunity to sell more cars.

Cars Social allows dealers and OEMs to target and serve native advertisements displaying real-time inventory to in-market car shoppers on Facebook and Instagram by leveraging our valuable audience data.

o Digital advertising services.

We offer programs that manage dealer search engine optimization, as well as paid media spend beyond the Cars.com platform.

These products are seamlessly connected to our website experience allowing dealers to convert traffic to paying customers.

Our data analytics and insights ensure dealers’ investments are deployed in the most efficient manner possible.

Our Strengths and Competitive Advantages.

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Our audience powers our integrated platform strategy.

Not only does our audience power our marketplace packages, they are also key to our ability to efficiently grow and scale our media solutions that allow customers to target in-market shoppers and strengthens our digital solutions.

In 2024, we had 26 million average monthly unique visitors that visited our marketplace a total of over 600 million times.

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Asset light business model with a diversified revenue base, attractive cash flow and strong balance sheet.

We generate over 80% of our revenue via subscription, creating a dependable recurring revenue stream across our diversified mix of marketplace subscription advertising packages, digital solutions, and media.

Customer concentration is also limited and each month, we generate an average monthly revenue per dealer of over $2,500 during the fourth quarter from each of our over 19,500 dealers.

We generate approximately 80% of our revenue via subscription, creating a dependable recurring revenue stream across our diversified mix of marketplace

subscription advertising packages, digital solutions, and media.

Customer concentration is also limited and each month, we generate an average monthly revenue per dealer of over $2,400 during the fourth quarter from across our over 19,200 dealers.

Our asset light business model drives significant net operating cash flow, in excess of $125.0 million in each of the last three years, resulting in substantial liquidity and financial flexibility, which enables us to invest in innovation, pursue strategic growth opportunities and maintain a healthy balance sheet with modest leverage.

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• Grow the industry's most engaged shopping audience.

With over 26 million average monthly unique visitors and over 600 million visits per year, we have one of the industry’s largest and most engaged in-market audience.

Our industry-leading

brand and high quality content allow us to generate over 60% of our audience organically.

With approximately 26 million average monthly unique visitors and over 600 million visits per year, we have one of the industry’s largest and most engaged in-market audience.

Our industry-leading brand and high quality content allow us to generate approximately 60% of our audience organically.

This reduces our reliance on search engine marketing and provides our dealers with access to an audience that cannot be easily duplicated.

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We have a significant opportunity to grow our base of dealer customers.

While we have a substantial dealer customer base of over 19,500, there are approximately 40,000 dealerships nationwide, providing us with ample room for growth domestically and geographically by expanding our presence in Canada through the D2C Media Inc.

("D2C Media") acquisition.

While we have a substantial dealer customer base of over 19,200, there are approximately 40,000 dealerships nationwide, providing us with ample room for growth domestically and geographically by expanding our presence in Canada through the D2C Media acquisition.

• Expand our relationship with dealers through greater adoption of our platform.

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We compete for various areas of dealers’ budget including with offline customer acquisition channels, software and solutions spend, other online automotive marketplaces, dealers’ own customer acquisition efforts on search engines and other internet sites that attract consumers searching for vehicles.

We compete primarily on the basis of the return on investment ("ROI") to the customer that our marketplace and our other solutions provide.

We compete primarily on the basis of the return on investment ("ROI")

to the customer that our marketplace and our other solutions provide.

We believe we are in a favorable market position due to our platform advantage utilizing our highly engaged, large, in-market consumer audience, resulting in high quality connections we provide to dealers, resulting in an attractive ROI.

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We have registered and unregistered U.S.

and international trademarks, service marks, domain names and copyrights.

In addition, we enter into confidentiality agreements with our employees, consultants, contractors and business partners.

Our employees and contractors are also subject to invention assignment provisions.

In addition, we control the use of our proprietary technology and intellectual property through provisions in both our general and product-specific terms of use on our mobile applications and websites.

and international trademarks, service marks, patents, domain names and copyrights.

In addition, we seek to protect our proprietary information by entering into confidentiality and invention assignment agreements with our employees and confidentiality agreements with consultants, contractors and business partners.

We also seek to control the use of our proprietary technology and intellectual property through provisions in both our general and product-specific terms of use on our mobile applications and websites.

Regulatory Matters.

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The advertising and sale of new or used vehicles is highly regulated by the states in which we do business.

Although we do not sell automobiles, the dealers from which we derive a significant portion of our revenue do and are subject to significant regulation.

Moreover, state regulatory authorities or other third parties could take and, on some occasions, have taken the position that some of the regulations applicable to dealers or to the manner in which automobiles are advertised and sold generally are directly applicable to our business model.

Additionally, our business is directly subject to laws, regulations and standards regarding marketing and advertising activities conducted by telephone, email, mobile devices and the internet, such as the Telephone Consumer Protection Act, the CAN-SPAM Act and similar state consumer protection laws.

Although we do not sell vehicles, the dealers from which we derive a significant portion of our revenue do and are subject to these regulations.

Moreover, state regulatory authorities or other third parties could take and, on some occasions, have taken the position that some of the regulations applicable to dealers or to the manner in which vehicles are advertised and sold generally are directly applicable to our business model.

Additionally, our business is directly subject to laws, regulations and standards regarding consumer communications, marketing and advertising activities conducted by telephone, email, mobile devices and the internet, such as the Telephone Consumer Protection Act, the CAN-SPAM Act and similar state consumer protection laws.

Our digital solutions products may also be subject to laws and regulations governing accessibility, intellectual property ownership, obscenity, libel and privacy among other issues.

In addition, we are subject to numerous federal, national, state and local laws and regulations in the United States and internationally regarding privacy and the collection, processing, storage, sharing, disclosure, use and protection of personal information and other data, such as the Gramm-Leach-Bliley Act or the California Consumer Privacy Act or the California Privacy Rights Act.

In addition, we are subject to local, state and federal laws and regulations in the United States and internationally relating to privacy policies and obligations as well as our obligations regarding the personal information we collect, use, share, store and disclose.

We strive to comply with industry standards and all applicable laws, policies, legal obligations relating to privacy and data protection.

We are also subject to our privacy policies and privacy-related obligations to third parties.

To operate in this highly regulated environment, we have developed our products and services with a view toward appropriately managing the risk of our regulatory compliance.

To operate in this highly regulated environment, we have developed our products and services with a view toward appropriately managing our regulatory risk compliance.

If, and to the extent that, our products and services fail to satisfy relevant regulatory requirements, we could be subject to significant civil and criminal penalties, including fines, the award of significant damages in class action or other civil litigation, as well as orders that may interfere with our ability to provide our products and services in certain states.

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We believe our highly innovative and collaborative teams are one of our biggest differentiators and the most important investment we can make at Cars Commerce.

To attract and retain talented employees to achieve our mission to simplify everything about buying and selling cars, we offer competitive benefits, including market-competitive compensation, an Employee Stock Purchase Plan, a virtual first work environment, healthcare, paid time off, parental leave, adoption assistance, retirement benefits, tuition assistance, employee skills development and leadership development.

At Cars Commerce, we are committed to a workforce that is representative of our customers and car shoppers.

We accomplish this goal by fostering a culture of diversity, equity and inclusion to ensure a workplace that appreciates the views and ideas of all.

In order to attract and retain exceptional talent in pursuit of our mission to simplify everything about

buying and selling cars, we offer competitive benefits, including market-competitive compensation, an Employee Stock Purchase Plan, a virtual first work environment, healthcare, paid time off, parental leave, adoption assistance, retirement benefits, tuition assistance, volunteer hours, employee skills development and leadership development.

At Cars Commerce, we recognize the value of a workforce with varied backgrounds, opinions, perspectives and personal and professional experiences.

As a result, we strive to foster a culture of inclusion that ensures our workplace appreciates the views and ideas of all.

Cars Commerce also monitors employee satisfaction and engagement by conducting periodic surveys that are reviewed and, when appropriate, acted upon by our executive management team and shared with our Board of Directors.

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Securities and Exchange Commission ("SEC").

In addition, the SEC maintains a website (http://www.sec.gov) that contains information we

electronically file with, or furnish to, the SEC.

In addition, the SEC maintains a website (http://www.sec.gov) that contains information we electronically file with, or furnish to, the SEC.

Information on our website is not part of this or any other report we file with, or furnish to, the SEC.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business