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Item 7. Management’s Discussion and Analysis

2026-02-26 compared with 2025-02-27 · 381 added, 470 removed, 739 unchanged (54% of the section changed)

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The following discussion and analysis of our business, financial condition, results of operations and quantitative and qualitative disclosures should be read in conjunction with our Consolidated Financial Statements and related notes included elsewhere in this Annual Report on Form 10-K.

This discussion and analysis also contains forward-looking statements and should also be read in conjunction with the disclosures and information contained in "Note About Forward-Looking Statements" and "Risk Factors" in this Annual Report on Form 10-K.

References in this discussion and analysis to "we," "us," "our", "Cars Commerce" and similar terms refer to Cars.com Inc.

This discussion and analysis also contains forward-looking statements and should be read in conjunction with the disclosures and information contained in "Note About Forward-Looking Statements" and "Risk Factors" in this Annual Report on Form 10-K.

The financial information discussed below and included elsewhere in this Annual Report on Form 10-K may not necessarily reflect what our financial condition, results of operations and cash flows may be in the future.

References in this discussion and analysis to "we," "us," "our" and similar terms refer to Cars.com Inc.

and its subsidiaries, collectively, unless the context indicates otherwise.

Business Overview.

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 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:

our flagship automotive marketplace and dealer reputation site Cars.com, award-winning digital retail technology and marketing services from Dealer Inspire and D2C Media, essential trade-in and appraisal technology from AccuTrade, and exclusive in-market media solutions from the Cars Commerce Media Network.

Cars.com Inc.

is a trusted audience-powered and data-driven technology platform that simplifies buying and selling cars.

The flagship Cars.com marketplace connects millions of consumers to dealerships across the U.S., powering the car buying experience with artificial intelligence ("AI") shopping tools and comprehensive vehicle reviews and content.

Our interconnected ecosystem of products enables dealers and OEMs to sell more cars by efficiently leveraging our marketplace, dealer websites, trade and appraisal tools and proprietary in-market media solutions.

Overview of Results

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We regularly review a number of key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make operating and strategic decisions.

Annual information regarding Traffic, Average Monthly Unique Visitors ("UVs") and Monthly Average Revenue Per Dealer ("ARPD") is as follows (Traffic and Average Monthly Unique Visitors in thousands):

Key Operating Metrics are as follows (Traffic and Average Monthly Unique Visitors in thousands):

Year Ended December 31,

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Monthly Average Revenue Per Dealer - Annual

Quarterly information regarding our Dealer Customers and ARPD is as follows:

December 31, 2025

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Monthly Average Revenue Per Dealer - Quarterly

UVs and Traffic.

Average Monthly Unique Visitors ("UVs") and Traffic.

UVs and Traffic are fundamental to our business.

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We believe we have achieved audience scale as measured by UVs and Traffic.

Traffic is driven by a combination of UVs visiting our properties and repeat visitation and engagement.

Traffic is driven by a combination of UVs visiting our properties, repeat visitation and engagement.

We monetize impressions, clicks and other connections that result from traffic to our site via our products and services.

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.com property on an individual device/browser combination or installs one of our mobile apps on an individual device.

Visitors are identified upon first visit to an individual Cars.com property on an individual device/browser combination or installation of 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.

Traffic is defined as the number of visits to Cars.com desktop and mobile properties (responsive sites and mobile apps).

We measured UVs and Traffic via Adobe Analytics through the year ended December 31, 2023.

As of January 1, 2024, we began to measure UVs and Traffic via RudderStack, which we

believe better aligns to our product and technology platform and provides improved visibility into our UVs and Traffic.

Prior period UVs and Traffic information has not been recast, as it is impracticable to do so.

These metrics do not include traffic to Dealer Inspire or D2C Media websites.

UVs decreased 3% year-over-year for the year ended December 31, 2024, primarily driven by normalizing demand from consumers due to increased vehicle inventory levels, continued elevated prices and higher interest rates, partially offset by shifts in our marketing mix.

Additionally, UVs for the year ended December 31, 2023 benefited from Q1 2023 being our highest quarter ever for UVs.

Traffic increased 2% year-over-year for the year ended December 31, 2024, primarily driven by the shift to RudderStack, higher repeat visitation and optimization of our user acquisition strategy, partially offset by shifts in our marketing mix.

We believe that our ability to grow ARPD is an indicator of the value proposition of our platform.

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.

Beginning December 31, 2023, this key operating metric includes D2C Media.

ARPD for the annual period of 2024 remained flat compared to the annual period 2023.

For the three months ended December 31, 2024, ARPD decreased 2% compared to the three months ended December 31, 2023, primarily due to the impact of one additional month of D2C Media.

For the three months ended December 31, 2024, ARPD remained flat compared to the three months ended September 30, 2024.

Traffic is defined as the number of

visits to Cars.com desktop and mobile properties (responsive sites and mobile apps).

We measure UVs and Traffic via RudderStack.

These metrics do not include traffic to Dealer Inspire, D2C Media or DealerClub websites.

UVs increased 1% year-over-year and Traffic remained flat year-over-year for the year ended December 31, 2025, reflecting the impacts of tariff-motivated consumer demand at the beginning of the year and tactical improvements in the marketing mix throughout the year, partially offset by depressed consumer demand due to the federal government shutdown at the end of the year.

Dealer Customers .

Dealer Customers represent dealerships subscribed to our products as of the end of each reporting period.

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.

Beginning December 31, 2023, this key operating metric includes D2C Media.

Dealer Customers decreased 2% from December 31, 2023, primarily due to normalizing dealer profitability given increased inventory, which we believe to be influenced by higher flooring expense for our dealer customers.

Multi-franchise dealerships at a single location are counted as one dealer.

Dealer Customer metrics do not include DealerClub.

Dealer Customers increased 2% from December 31, 2024, primarily due to an increase in marketplace customers.

Dealer Customers remained flat from September 30, 2025.

Monthly Average Revenue Per Dealer ("ARPD").

We believe that our ability to grow ARPD is an indicator of the value proposition of our platform.

We define ARPD as Dealer revenue, excluding digital advertising services and DealerClub, during the period divided by the monthly average number of Dealer Customers during the same period.

For the annual period of 2025, ARPD decreased 1% compared to the annual period 2024, primarily due to changes in our customer and product mix.

For the three months ended December 31, 2025, ARPD remained flat compared to the three months ended December 31, 2024, primarily due to marketplace repackaging, offset by changes in our customer and product mix.

For the three months ended December 31, 2025, ARPD remained flat compared to the three months ended September 30, 2025, primarily due to changes in our customer and product mix.

Factors Affecting Our Performance.

Our business is impacted by changes in the larger automotive ecosystem, including supply and demand for new and used vehicle inventory, global supply chain and information systems disruptions, semiconductor and raw material shortages, vehicle acquisition cost, vehicle retail prices, the rate of electric vehicle adoption, employee retention and changes related to automotive advertising, among other macroeconomic factors including the political environment, inflationary pressures, tariffs and prevailing interest rates.

Changes in vehicle sales volumes in the United States and Canada also influence OEMs’ and dealerships’ willingness to increase investments in technology solutions and automotive marketplaces like Cars.com and could impact our pricing strategies and/or revenue mix.

Our long-term success will depend in part on our ability to continue to execute our platform strategy including continuing to create the most engaged in-market audience, growing our dealer customers, expanding our relationship with dealers through greater adoption of our platform, unlocking the cross-sell, transforming our OEM relationships and creating platform advantages.

We believe our core strategic strengths, including our powerful family of brands, growing high-quality audience and suite of digital solutions for advertisers, including machine learning model artificial intelligence, will assist us as we navigate a rapidly changing automotive environment.

Additionally, we are focused on equipping our customers with digital solutions to enable them to compete in an environment in which an increasing number of car-buying customers are shopping online.

These solutions include online chat, vehicle financing, appraisal and valuation, instant guaranteed offer capabilities and logistics technology.

The foundation of our continued success is the value we deliver to customers, and we believe that our large audience of in-market car shoppers and innovative solutions deliver significant value to our customers.

Changes in vehicle sales volumes in the United States and Canada also influence OEMs’ and dealerships’ willingness to increase investments in marketing spend and technology solutions and could impact our pricing strategies and/or revenue mix.

Our long-term success will depend in part on our ability to attract and engage an in-market audience, to grow inventory supply and our dealer customers, to expand our relationship with dealers through greater adoption of our product offering, to transform our OEM relationships and to create operating leverage.

We believe our core strategic strengths, including our Cars.com brand, growing high-quality audience and suite of digital solutions for dealers and OEMs, including AI-based tools, will assist us as we navigate a rapidly changing automotive environment.

Results of Operations

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Interest expense, net

Other income (expense), net

Total nonoperating income (expense), net

Other income, net

Total nonoperating (expense) income, net

Income before income taxes

Income tax expense (benefit)

Income tax expense

*** Not meaningful

Dealer revenue .

Dealer revenue is typically subscription-oriented and consists of marketplace, digital experience, including website solutions and AccuTrade, and media products sold to dealer customers.

Dealer revenue is our largest revenue stream, representing 89% and 90% of total revenue for the years ended December 31, 2024 and 2023, respectively.

Dealer revenue increased $19.1 million or 3%, primarily driven by the incremental revenue related to the acquisition of the D2C Media business and growth in digital experience revenue, including our website creation and hosting.

Dealer revenue is typically subscription-oriented and consists of marketplace, digital experience, including website solutions, trade and appraisal and media products sold to dealer customers.

Dealer revenue is our largest revenue stream, representing 89% of total revenue for both the years ended December 31, 2025 and 2024.

Dealer revenue increased $3.3 million or 1%, primarily due to continued growth in solutions, partially offset by declines in marketplace and media, as a result of lower average dealer count during the first half of 2025 and changes in our customer mix.

OEM and National revenue .

OEM and National revenue largely consists of Cars Commerce Media Network products, including display advertising and other solutions sold to OEMs, advertising agencies, automotive dealer associations and auto adjacent businesses, including insurance companies.

OEM and National revenue represented 9% and 8% of total revenue for the years ended December 31, 2024 and 2023, respectively.

OEM and National revenue increased $10.0 million or 18%, primarily due to increased OEM spending to raise consumer awareness, as on-the lot inventory continues to increase.

OEM and National revenue largely consists of media solutions products, including display advertising and other solutions sold to OEMs, advertising agencies, automotive dealer associations and auto adjacent businesses, including insurance companies.

OEM and National revenue represented 9% of total revenue for both the years ended December 31, 2025 and 2024.

OEM and National revenue decreased $0.6 million or 1%, which we believe is primarily due to shifts in spending by OEM partners.

Other revenue.

Other revenue primarily consists of revenue related to vehicle listing data sold to third parties and pay per lead products.

Other revenue represented 2% of total revenue for each of the years ended December 31, 2024 and 2023.

Other revenue increased $0.9 million or 8%, primarily due to the incremental revenue related to the acquisition of the D2C Media business, partially offset by the first quarter 2023 expiration of a license agreement entered into as part of the AccuTrade acquisition.

Other revenue primarily consists of revenue related to vehicle listing data sold to third parties.

Other revenue represented 2% of total revenue for both the years ended December 31, 2025 and 2024.

Other revenue increased $1.3 million or 11%.

Cost of revenue and operations .

Cost of revenue and operations expense primarily consists of costs related to processing dealer vehicle inventory, product fulfillment, pay per lead products and compensation costs for the product fulfillment and customer service teams.

Cost of revenue and operations expense represented 17% and 18% of total revenue for the years ended December 31, 2024 and 2023, respectively.

Cost of revenue and operations increased $2.1 million or 2%, but decreased as a percentage of revenue.

The change is primarily due to the incremental costs related to the acquisition of the D2C Media business.

Cost of revenue and operations expense primarily consists of costs related to processing dealer vehicle inventory, product fulfillment and compensation and severance costs for the product fulfillment and customer service teams.

Cost of revenue and operations expense represented 17% of total revenue for both the years ended December 31, 2025 and 2024.

Cost of revenue and operations decreased $1.0 million or 1%, primarily due to lower compensation expense, partially offset by higher third-party costs associated with certain products driven by slight shifts in product mix.

Product and technology.

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The technology team develops and supports our products, websites and mobile apps.

Product and technology expense includes compensation costs, consulting and contractor costs, hardware and software maintenance, software licenses and other infrastructure costs.

Product and technology expense represented 16% and 14% of total revenue for the years ended December 31, 2024 and 2023, respectively.

Product and technology expense increased $14.3 million or 14%, primarily due to higher compensation, including stock-based compensation and third-party costs, including licenses.

Product and technology expense includes compensation costs, consulting and contractor costs, hardware and software maintenance, software licenses, other infrastructure costs, costs related to the write-off of assets and severance costs.

Product and technology expense represented 16% of total revenue for both the years ended December 31, 2025 and 2024.

Product and technology expense decreased $0.5 million, primarily due to lower stock-based compensation, partially offset by incremental costs related to the acquisition of DealerClub Inc.

("DealerClub").

For more information related to the acquisition see Note 3 (Business Combinations) to the accompanying Consolidated Financial Statements included in Part II, Item 8,.

"Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

Marketing and sales .

Marketing and sales expense primarily consists of traffic and lead acquisition costs, performance and brand marketing, trade events, compensation costs and travel for the marketing, sales and sales support teams, as well as bad debt expense related to the allowance for doubtful accounts.

Marketing and sales expense primarily consists of traffic and lead acquisition costs, performance and brand marketing, trade events, compensation costs and travel for the marketing, sales and sales support teams, severance costs and bad debt expense related to the allowance for doubtful accounts.

Marketing and sales expense represented 33% and 32% of total revenue for the years ended December 31, 2025 and 2024, respectively.

Marketing and sales expense decreased $4.0 million or 2%, primarily due to changes in our marketing investment and mix, partially offset by incremental costs related to the acquisition of the D2C Media business.

Marketing and sales expense increased $7.1 million or 3%, primarily due to higher compensation, including stock-based compensation, and severance-related costs, as well as changes in our marketing investment, partially offset by lower bad debt expense.

General and administrative .

General and administrative expense primarily consists of compensation costs for certain of the executive, finance, legal, human resources, facilities and other administrative employees.

In addition, general and administrative expense includes the cost of office space, legal, accounting and other professional services, transaction-related costs, severance, transformation and other exit costs and costs related to the write-off of assets.

General and administrative expense primarily consists of compensation costs for certain executive, finance, legal, human resources, facilities and other administrative employees.

General and administrative expense represented 13% and 12% of total revenue for the years ended December 31, 2025 and 2024, respectively.

General and administrative expense increased $11.9 million or 15%, the majority of which is due to incremental costs related to the acquisition of the D2C Media business, including compensation expense of $10.8 million related to the D2C Media earnout.

Additionally, the change is impacted by higher compensation, including stock-based compensation.

For information related to the D2C Media earnout, see Note 3 (Business Combinations) to the accompanying Consolidated Financial Statements included in Part II, Item 8., "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

General and administrative expense increased $7.1 million or 9%, primarily due to higher compensation, including stock-based compensation, severance-related and third-party costs, partially offset by lower costs associated with our amended headquarters office lease.

Depreciation and amortization .

Depreciation and amortization expense increased $6.2 million or 6%, primarily due to depreciation and amortization on additional assets acquired and the amortization of intangible assets related to the D2C Media Acquisition, partially offset by certain assets being fully depreciated and amortized as compared to the prior-year period.

Depreciation and amortization expense decreased $15.3 million or 14%, primarily due to certain assets being fully depreciated and amortized as compared to the prior-year period, partially offset by accelerated depreciation associated with our amended headquarters office lease.

Interest expense, net .

Interest expense, net was essentially flat compared to the prior-year period.

Interest expense, net decreased $1.8 million or 6%, primarily due to a reduction in total indebtedness compared to the prior-year period and lower interest rates.

For information related to our debt, see Note 6 (Debt) to the accompanying Consolidated Financial Statements included in Part II, Item 8., "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

Other income (expense), net.

Other income (expense), net changed primarily due to the change in the fair value of contingent consideration associated with the AccuTrade and CreditIQ acquisitions and the $10.8 million gain on the sale of our RepairPal, Inc.

("RepairPal") equity investment.

For more information related to contingent consideration, see the Liquidity and Capital Resources section below, and Note 3 (Business Combinations) and Note 4 (Fair Value Measurements) to the accompanying Consolidated Financial Statements included in Part II, Item 8., "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

Other income, net.

Other income, net changed primarily due to the change in the fair value of contingent consideration associated with the Accu-Trade, LLC and CreditIQ, Inc.

acquisitions and the $10.8 million gain on the sale of our RepairPal, Inc.

("RepairPal") equity investment, both of which were recorded in the prior period, partially offset by the impact of foreign exchange rates.

For more information on the sale of our RepairPal equity investment, see Note 2 (Significant Accounting Policies) to the accompanying Consolidated Financial Statements included in Part II, Item 8., "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

Income tax expense (benefit) .

The effective income tax rate differed from the statutory federal income tax rate of 21%, primarily due to the impact of state income taxes, net of federal income tax expense, nondeductible transaction expenses and nondeductible executive compensation, partially offset by tax credits and the release of the remaining portion of our valuation allowance.

The prior period income tax benefit was primarily due to the release of a significant portion of our valuation allowance for deferred tax assets that had been recorded as a result of the 2020 goodwill and indefinite-lived intangible asset impairments.

Income tax expense .

Our effective income tax rate increased to 41.5% from 22.1% in the prior-year period.

The increase is primarily due to an outsized impact of state income taxes, net of federal income tax effect and nondeductible items, partially offset by the benefit of tax credits on substantially lower pre-tax income as compared to the prior-year period.

Our effective income tax rate is generally more volatile at lower amounts of pre-tax income since the impact of our reconciling items is greater.

For more information, see Note 12 (Income Taxes) to the Consolidated Financial Statements included in Part II, Item 8., "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

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Our primary sources of liquidity are cash flows from operations, available cash reserves and borrowing capacity available under our credit facility.

Our positive operating cash flow, along with our Revolving Loan, provide adequate liquidity to meet our business needs for the next 12 months and beyond, including those for investments, debt service, share repurchases, contingent consideration payments and strategic acquisitions.

We believe our positive operating cash flow, along with our $350.0 million revolving loan due in 2029 ("Revolving Loan"), provide adequate liquidity to meet our business needs for the next twelve months and beyond, including those for investments, debt service, share repurchases and strategic acquisitions.

However, our ability to maintain adequate liquidity in the future is dependent upon a number of factors, including our revenue, our ability to contain costs, including capital expenditures, and to collect accounts receivable and various other macroeconomic factors, many of which are beyond our direct control.

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As of December 31, 2025, the outstanding aggregate principal amount of our indebtedness was $455.0 million, at an average interest rate of 6.3%, including $400.0 million of outstanding aggregate principal under the 6.375% Senior Unsecured Notes due in 2028 and $55.0 million of outstanding principal under the Revolving Loan which had an interest rate of 5.8%.

On May 6, 2024, we amended and extended our existing Credit Agreement (the "Fifth Amendment") which resulted in a new $350.0 million Revolving Loan due in 2029.

Upon closing, we borrowed $80.0 million under the new Revolving Loan to repay the outstanding $45.0 million in aggregate principal amount of existing Term Loan and $35.0 million in aggregate principal amount of existing Revolving Loan balances.

During the year ended December 31, 2024, we made $10.0 million in mandatory Term Loan payments and repaid $20.0 million on our Revolving Loan.

During the year ended December 31, 2025, we borrowed $10.0 million and repaid $15.0 million on our Revolving Loan.

As of December 31, 2025, $295.0 million was available to borrow under the Revolving Loan.

Our borrowings are limited by our Senior Secured Net Leverage Ratio and Consolidated Interest Coverage Ratio, in addition to other factors.

Calculated in accordance with our Credit Agreement, these ratios were 0.04x and 6.5x, respectively, as of December 31, 2024.

At each quarter-end, we are subject to certain net leverage ratio and interest coverage ratio financial covenants under our Credit Agreement.

As of December 31, 2025, we were in compliance with all such covenants.

For further information, see Note 6 (Debt) to the accompanying Consolidated Financial Statements included in Part II, Item 8., "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

Share Repurchase Program .

On February 21, 2022, our Board of Directors authorized a three-year share repurchase program to acquire up to $200.0 million of our common stock.

During the year ended December 31, 2024, we repurchased and subsequently retired 2.8 million shares for $49.2 million at an average price per share of $17.72.

The share repurchase authorization expired on February 21, 2025.

As a result, on February 24, 2025, our Board of Directors authorized a new three-year share repurchase program to acquire up to $250.0 million of our common stock.

On February 27, 2025, we announced that our Board of Directors had authorized a three-year share repurchase program to acquire up to $250.0 million of our common stock.

The repurchase program may be suspended or discontinued at any time and does not obligate us to repurchase any specific amount or number of shares.

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We intend to fund the share repurchase program principally with cash from operations.

Contingent Consideration and Earnout.

The fair value as of December 31, 2024 for the contingent consideration related to the CreditIQ and AccuTrade acquisitions was $0.5 million.

Within the next twelve months, we expect to pay $10.9 million of potential contingent consideration and D2C Media earnout discussed below.

During the year ended December 31, 2024, we paid $30.4 million related to contingent consideration and earnout, which reduced the corresponding liability.

The contingent consideration and earnout consists of the following:

• The contingent consideration associated with the CreditIQ acquisition was based on two achievement objectives, including an earnings-related metric and lender market share.

The actual amount to be paid was based on the future performance of the acquired business attained over a three-year performance period through December 2024.

• The contingent consideration associated with the AccuTrade Acquisition is based on achievement of an earnings-related metric.

For the AccuTrade contingent consideration, we have the option to pay consideration in cash or certain amounts in stock, which may result in a variable number of shares being issued in accordance with a calculation based on future share prices.

The actual amount to be paid will be based on the future performance of the acquired business to be attained over a three-year performance period through February 2025.

• As part of the D2C Media Acquisition, we may be required to pay additional cash consideration to certain former owners who are now employees of Cars Commerce based on the achievement of a revenue performance metric.

The amount to be paid will be determined by the acquired business' future achievement of certain revenue-related financial targets through December 31, 2025 and expensed over each performance period.

We may expense up to CAD$15.0 million (approximately US$10.4 million as of December 31, 2024) associated with the remaining portion of the earnout for the year ending December 31, 2025.

For information related to the contingent consideration and earnout, see Note 3 (Business Combinations) and Note 4 (Fair Value Measurements) in Part II, Item 8., "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

Lease Amendment.

In May 2016, we entered into a lease of office space in Chicago, Illinois.

In November 2024, we amended the lease, which resulted in a reduction of our office space by 67%, extension of the lease term from June 2031 to June 2036 for the remaining portion, and paid a termination penalty of $10.5 million.

The December 31, 2024 Consolidated Financial Statements and related notes to the Consolidated Financial Statements reflect the impact of the amendment and the related termination penalty.

In 2025, as a result

of the amendment, we expect a $5.3 million decrease in lease related costs, primarily driven by an abatement of variable lease costs, as well as operating lease costs amortized over an extended lease term.

We also expect to see significant savings over the original lease term ending in 2031.

For more information, see Note 9 (Leases) in Part II, Item 8., "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

During the year ended December 31, 2025, we repurchased and subsequently retired 7.1 million shares for $86.0 million at an average price per share of $12.17.

As of December 31, 2025, $173.8 million remained under the share repurchase program.

• As part of the acquisition of D2C Media, Inc.

("D2C Media"), are required to pay additional cash consideration to certain former owners who are now employees of the Company based on the achievement of a revenue performance metric.

The amount to be paid will be determined by the acquired business’ achievement of certain revenue-related financial targets through December 31, 2025 and expensed over each performance period.

In April 2025, we paid CAD$15.0 million (approximately USD$10.8 million) associated with the earnout for the year ended December 31, 2024.

For the year ending December 31, 2025, we expensed CAD$15.0 million (approximately USD$10.9 million as of December 31, 2025) associated with the remaining portion of the earnout, which is expected to be paid in 2026.

• As part of the DealerClub acquisition, we may be required to pay additional performance-based consideration of up to $88.0 million, which may be paid in cash, or stock if mutually agreed upon, to certain former owners who are now employees of the Company.

The amount paid will be determined by DealerClub's future achievement of certain revenue-related financial targets through December 31, 2028, and will be expensed over the relevant performance periods.

No such consideration was expensed during the year ended December 31, 2025.

For information related to the earnouts, see Note 3 (Business Combinations) in Part II, Item 8., "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

Details of our cash flows are as follows (in thousands):

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Operating Activities.

C ash provided by operating activities for the year ended December 31, 2024 increased due to Net income after non-cash adjustments, partially offset by changes in working capital compared to the year ended December 31, 2023.

Cash provided by operating activities for the year ended December 31, 2025 decreased slightly as compared to the year ended December 31, 2024, primarily due to an increase of $7.8 million of earnout payments related to the D2C Acquisition, as well as lower Net income and the related adjustments in the Consolidated Statement of Cash Flows.

These decreases were partially offset by the impact of the prior year payment of the $10.5 million lease termination penalty.

For further information, see the Consolidated Statements of Cash Flows included in Part II, Item 8., "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

Investing Activities.

The decrease in cash used in investing activities was primarily related to the impact of the D2C Media Acquisition in the prior year, partially offset by increases in capitalization of internally developed software and purchases of property and equipment.

The increase in cash used in investing activities during the year ended December 31, 2025 as compared to the year ended December 31, 2024 was primarily related to the impact of the DealerClub Acquisition and the investment in an $8.0 million secured convertible note, partially offset by the proceeds collected from the sale of the RepairPal equity investment in the current year.

Financing Activities.

During the year ended December 31, 2024, cash used in financing activities was primarily related to repurchases of common stock, debt repayments, payments of contingent consideration and tax payments made in connection with the vesting of certain equity awards.

During the year ended December 31, 2023, cash used in financing activities was primarily related to debt repayments, repurchases of common stock and tax payments made in connection with the vesting of certain equity awards, offset by proceeds from Revolving Loan borrowings related to the D2C Media Acquisition.

For information related to our debt, repurchases of common stock and contingent consideration, see Note 4 (Fair Value Measurements), Note 7 (Debt) and Note 11 (Stockholders' Equity) to the accompanying Consolidated Financial Statements included in Part II, Item 8., "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

During the year ended December 31, 2025, cash used in financing activities was primarily related to repurchases of common stock, net debt repayments and tax payments made in connection with the vesting of certain equity awards.

During the year

ended December 31, 2024, cash used in financing activities was primarily related to repurchases of common stock, debt repayments, payments of contingent consideration and tax payments made in connection with the vesting of certain equity awards.

For information related to our debt and repurchases of common stock see Note 6 (Debt) and Note 9 (Stockholders' Equity) to the accompanying Consolidated Financial Statements included in Part II, Item 8., "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

Contractual Obligations.

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(3) Other obligations represent commitments under certain vendors and other contracts.

Excluded from the above table is the contingent consideration related to the CreditIQ and AccuTrade acquisitions and the earnout related to the D2C Media Acquisition as the amounts and timing are uncertain with the exception of the portion for D2C Media that was earned as of December 31, 2024.

For more information related to the earnout and contingent consideration, see Note 3 (Business Combinations) and Note 4 (Fair Value Measurements) to the accompanying Consolidated Financial Statements included in Part II, Item 8., "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

Commitments and Contingencies.

For information related to commitments and contingencies, see Note 8 (Commitments and Contingencies) to the accompanying Consolidated Financial Statements included in Part II, Item 8., "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

Subsequent Events.

DealerClub Acquisition.

In January 2025, we acquired all of the outstanding stock of DealerClub, Inc.

("DealerClub"), an emerging dealer-to-dealer digital wholesale auction platform that facilitates transparent and efficient transactions between automotive dealers.

Cash consideration for the transaction was approximately $25.3 million at closing paid with cash on hand.

There is also the potential for additional performance-based consideration of up to $88.0 million through 2028, which may be paid in cash or stock.

The amount to be paid will be based on achievement of certain financial thresholds.

Share Repurchase Program.

In February 2025, our Board of Directors authorized a share repurchase program to acquire up to $250.0 million of our common stock over a three-year period.

The repurchase program may be suspended or discontinued at any time and does not obligate us to repurchase any specific amount or number of shares.

We may repurchase shares from time to time in open market transactions or through privately negotiated transactions in accordance with applicable federal securities laws and other applicable legal requirements, and subject to our blackout periods.

We intend to fund the share repurchase program principally with cash from operations

Off-Balance Sheet Arrangements.

We do not have any material off-balance sheet arrangements.

Critical Accounting Policies and Estimates.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes.

Actual results could differ significantly from those estimates.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.

Although these estimates are based on management's best knowledge of current events and actions that the Company may undertake in the future, actual results may differ from those estimates.

We believe the following discussion addresses our most critical accounting policies, which are those that are important to the presentation of our financial condition and results of operations and require management’s most subjective and complex judgments.

Revenue Recognition.

We account for a customer arrangement when we and the customer have an approved contract that specifies the rights and obligations of each party and the payment terms, and we believe it is probable that we will collect substantially all of the consideration to which we will be entitled in exchange for the services that will be provided to the customer.

We account for a customer arrangement when we and the customer have an approved and signed contract that specifies the rights and obligations of each party and the payment terms, and we believe it is probable that we will collect substantially all of the consideration to which we will be entitled in exchange for the services that will be provided to the customer.

We periodically enter into arrangements that include multiple promises that we evaluate to determine whether the promises are separate performance obligations.

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Revenue is primarily generated through our direct sales force.

Dealer revenue consists of marketplace, digital solutions, including website solutions and AccuTrade and media products sold to dealer customers, and is typically subscription-oriented in nature.

Dealer revenue consists of marketplace, digital experience, including website solutions, vehicle acquisition and media products sold to dealer customers, and is typically subscription-oriented in nature.

Further information related to Dealer revenue in the Consolidated Statements of Income is as follows:

• Marketplace .

• Subscription Based Products .

We offer our dealers with subscription based packages across four capabilities:

Marketplace, Digital Experience, Media Solutions and Trade & Appraisal.

Our subscription packages are generally a fixed price arrangement with varying contract terms that are automatically renewed, typically on a month-to-month basis.

We recognize our subscription revenue ratably as the service is provided over the contract term.

Our primary source of revenue is through the sale of marketplace subscription advertising packages to dealer customers.

Our subscription packages allow dealer customers and OEMs to showcase their new and used vehicle inventory to in-market shoppers on the Cars.com website.

The subscription packages are generally a fixed price arrangement with varying contract terms, typically ranging from three to six months, that are automatically renewed, typically on a month-to-month basis.

We recognize subscription package revenue ratably as the service is provided over the contract term.

• Digital Experience.

We provide services, including hosting flexible, custom-designed website platforms supporting digital retailing and messaging platform products.

We recognize this subscription revenue ratably as the service is provided over the contract term.

• Trade & Appraisal.

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

We recognize AccuTrade subscription revenue ratably as the service is provided over the contract term.

• Cars Commerce Media Network.

The Cars Commerce Media Network unifies our media products, including In-Market Display, Cars Social, In-Market Video and VIN Performance Media.

o Add-on Marketplace and Digital Experience products include premium advertising products that can be uniquely tailored to an individual dealer customer’s current needs.

Substantially all of our add-on products are not sold separately from the subscription packages as the customer cannot benefit from add-on products on their own.

Therefore, the subscription packages and add-on products are combined as a single performance obligation, and we recognize the related revenue ratably as the services are provided over the contract term.

o We also provide certain non-subscription digital advertising services to dealer customers.

Our subscription based add-on media products include:

Cars Social, In-Market Video and VIN Performance Media.

Substantially all of our add-on products are not sold separately from our subscription packages as the customer cannot benefit from add-on products on a standalone basis.

Therefore, our other subscription packages and add-on products are combined as a single performance obligation, and we recognize the related revenue ratably as the services are provided over the contract term.

• Other Media Solutions.

We also provide certain non-subscription digital advertising services to dealer customers.

We recognize revenue related to these services at the point in time the service is provided.

OEM and National revenue.

OEM and National revenue largely consists of Cars Commerce Media Network products, including In-Market Display and other solutions sold to OEMs, advertising agencies, automotive dealer associations and auto adjacent businesses, including insurance companies.

OEM and National revenue in the Consolidated Statements of Income largely consists of media products sold to OEMs and auto adjacent businesses, including insurance companies.

Revenue related to OEM and National customers are primarily transaction-based contracts, which are billed for impressions delivered or click-throughs on their advertisements.

An impression is the display of an advertisement to an end-user on the website and is a measure of volume.

An impression is the display of an advertisement to an end-user on the Cars.com website and is a measure of volume.

A click-through occurs when an end-user clicks on an impression.

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If the impressions or click-throughs delivered are less than the amount invoiced to the customer, the difference is recorded as deferred revenue and recognized as revenue when earned.

We recognize revenue related to

these services at the point in time the service is provided.

In-Market Display products revenue sold to OEMs and national customers is recorded in OEM and National revenue in the Consolidated Statements of Income.

We recognize revenue related to these services at the point in time the service is provided.

Other Revenue.

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We recognize other revenue either ratably as the services are provided or at the point in time the services have been performed.

In connection with the AccuTrade Acquisition, we entered into an agreement to provide one of the former owners with a one-year license to a certain product.

The recognition of revenue associated with the license fee is recorded in Other revenue.

Other revenue is recorded in Other revenue in the Consolidated Statements of Income.

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If an impairment is identified, the asset is written down to fair value as required.

CreditIQ Contingent Consideration.

As part of the CreditIQ acquisition, we may be required to pay up to an additional $50.0 million in cash consideration to the former owners based on two different earn-out achievement objectives, including an earnings-related metric and lender market share.

The actual amount to be paid will be based on the acquired business’s future performance to be attained over a three-year performance period.

The contingent consideration is classified as Level 3 in the fair value hierarchy and the fair value is measured based on a Monte Carlo simulation or a scenario-based method, depending on the earn-out achievement objective, utilizing projections about future performance.

Significant inputs include volatility and projected financial information.

AccuTrade Contingent Consideration.

As part of the AccuTrade Acquisition, we may be required to pay additional consideration to the former owners based on achievement of an earnings-related metric.

We have the option to pay consideration in cash or certain amounts in stock, which would result in a variable number of shares being issued.

The amount to be paid will be determined by AccuTrade's performance over a three-year performance period;

based on certain tiered performance metrics, the maximum amount to be paid is $63.0 million, with additional upside for performance that exceeds the tiered performance metrics.

The contingent consideration fair value is measured based on a Monte Carlo simulation and is classified as Level 3 in the fair value hierarchy.

Significant inputs include volatility and projected financial information.

Contingent Consideration.

Our contingent consideration obligations are from arrangements resulting from acquisitions that involve potential future payment of consideration that is contingent upon the achievement of certain financial metrics or lender market share.

Contingent consideration is recognized at its estimated fair value at the date of acquisition based on our expected future payment, discounted using accepted valuation methodologies.

We review and re-assess the estimated fair value of contingent consideration liabilities at each reporting period and the updated fair value could differ materially from the initial estimates.

We measure contingent consideration recognized in connection with acquisitions at fair value on a recurring basis using significant unobservable inputs classified as Level 3 inputs.

The fair value is measured based on a Monte Carlo simulation or a scenario-based method, depending on the earnout objective and timing.

The fair value measurement includes the following significant inputs:

In the prior periods presented, we had contingent consideration obligations from arrangements resulting from acquisitions that involved potential future payment of consideration that was contingent upon the achievement of certain financial metrics or lender market share.

Contingent consideration was recognized at its estimated fair value at the date of acquisition based on our expected future payment, discounted using accepted valuation methodologies.

We reviewed and re-assessed the estimated fair value of contingent consideration liabilities at each reporting period and the updated fair value could differ materially from the initial estimates.

We measured contingent consideration recognized in connection with acquisitions at fair value on a recurring basis using significant unobservable inputs classified as Level 3 inputs.

The fair value was measured based on a Monte Carlo simulation or a scenario-based method, depending on the earnout objective and timing.

The fair value measurement included the following significant inputs:

volatility and projected financial information.

Significant increases or decreases to any of these inputs in isolation could result in a significantly higher or lower liability.

Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate on the acquisition date and each reporting period and the amount paid will be recognized in earnings within Other expense, net on the Consolidated Statements of Income.

Ultimately, the liability was equivalent to the amount paid, and the difference between the fair value estimate on the acquisition date and each reporting period and the amount paid was recognized in earnings within Other income (expense), net in the Consolidated Statements of Income.

Income Taxes.

We account for income taxes according to the asset and liability method.

Under this method, deferred income tax assets and liabilities are determined based on the estimated future tax effects of temporary differences between the financial statement carrying value and tax basis of assets and liabilities, as measured by current enacted tax rates.

The effect of a tax rate change on deferred tax assets and liabilities is recognized in the Consolidated Statements of Income in the period that includes the enactment date of the change.

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Uncertain tax positions that relate to deferred tax assets are recorded against deferred tax assets;

otherwise, uncertain tax

positions are recorded as either a current or noncurrent liability in the Consolidated Balance Sheets.

otherwise, uncertain tax positions are recorded as either a current or noncurrent liability in the Consolidated Balance Sheets.

See Note 12 (Income Taxes) to the Consolidated Financial Statements included in Part II, Item 8., "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

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Historically, we have not faced any significant foreign currency risk as our operations and sales have been primarily in the United States.

However, with the acquisition of D2C Media in November 2023, we have expanded our presence in Canada and therefore our risk related to changes in exchange rates between the U.S.

However, with the acquisition of D2C Media in November 2023, we expanded our presence in Canada and therefore, our risk related to changes in exchange rates between the U.S.

dollar and Canadian dollar.

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and Canadian entities that is subject to exchange rate fluctuations and will result in foreign exchange gains or losses depending on the currency movement during the respective time period.

The effect of foreign currency exchange rate fluctuations during 2023 and 2024 is immaterial.

The effect of foreign currency exchange rate fluctuations since 2023 is immaterial.

As we continue to grow our Canadian operations, we expect to continue to be exposed to foreign exchange rate risk.

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Accrued compensation

Current portion of long-term debt, net

Other accrued liabilities

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Accumulated deficit

Accumulated other comprehensive (loss) income

Accumulated other comprehensive loss

Total stockholders' equity

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Cars.com Inc.

Consolidated Statem ents of Income

Consolidated Statements of Income

(In thousands, except per share data)

Year Ended December 31,

OEM and National

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Other income (expense), net

Total nonoperating income (expense), net

Total nonoperating (expense) income, net

Income before income taxes

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Weighted-average common shares outstanding:

Earnings per share:

Net income per share:

The accompanying notes are an integral part of these Consolidated Financial Statements.

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Year Ended December 31,

Other comprehensive (loss) income, net of tax:

Other comprehensive income (loss) net of tax:

Foreign currency translation adjustments

Reclassification of Accumulated other comprehensive loss on interest rate swap into Net income

Total other comprehensive (loss) income, net of tax

Total other comprehensive income (loss), net of tax

Comprehensive income

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Accumulated Other

Comprehensive (Loss) Income

Comprehensive Income (Loss)

Stockholders'

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Balance at December 31, 2023

Other comprehensive income, net of tax

Other comprehensive loss, net of tax

Repurchases of common stock

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Balance at December 31, 2024

Other comprehensive loss, net of tax

Other comprehensive income, net of tax

Repurchases of common stock

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Amortization of intangible assets

Changes in fair value of contingent consideration

Stock-based compensation

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Amortization of debt issuance costs

Unrealized loss (gain) on foreign currency denominated transactions

Unrealized (gain) loss on foreign currency denominated transactions

Changes in fair value of contingent consideration

Gain on sale of equity investment

Amortization of deferred revenue related to AccuTrade Acquisition

Amortization of Accumulated other comprehensive loss on interest rate swap

Changes in operating assets and liabilities, net of acquisitions:

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Purchase of property and equipment

Proceeds from sale of equity investment

Purchase of convertible note receivable

Net cash used in investing activities

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Effect of exchange rate changes on Cash and cash equivalents

Net increase (decrease) in Cash and cash equivalents

Net increase in Cash and cash equivalents

Cash and cash equivalents at beginning of period

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Cash paid for income taxes

Cash paid for interest and swap

Cash paid for interest

The accompanying notes are an integral part of these Consolidated Financial Statements.

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Description of Business.

Cars.com Inc., d/b/a Cars Commerce Inc.

(the "Company" or "Cars Commerce") is an audience-driven technology company empowering the automotive industry.

The Company simplifies 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.

Cars.com Inc.

is a trusted audience-powered and data-driven technology platform that simplifies buying and selling cars.

The flagship Cars.com marketplace connects millions of consumers to dealerships across the U.S., powering the car buying experience with artificial intelligence shopping tools and comprehensive vehicle reviews and content.

The Company's interconnected ecosystem of products enables dealers and OEMs to sell more cars by efficiently leveraging its marketplace, dealer websites, trade and appraisal tools and proprietary in-market media solutions.

Significant Accounting Policies

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GAAP") and the rules and regulations of the SEC.

The Consolidated Financial Statements include the accounts of Cars Commerce and its 100 % owned subsidiaries.

The Consolidated Financial Statements include the accounts of the Company and its 100 % owned subsidiaries, including D2C Media and DealerClub since the dates of acquisition.

All intercompany transactions and accounts have been eliminated in consolidation.

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Reclassifications .

Certain prior year balances have been reclassified to conform to the current year presentation.

Certain prior period balances have been reclassified to conform to the current period presentation.

These reclassifications were not material to the previously reported Consolidated Financial Statements.

The Company accounts for a customer arrangement when the Company and the customer have an approved contract that specifies the rights and obligations of each party and the payment terms, and the Company believes it is probable that the Company will collect substantially all of the consideration to which the Company will be entitled in exchange for the services that will be provided to the customer.

The Company accounts for a customer arrangement when the Company and the customer have an approved and signed contract that specifies the rights and obligations of each party and the payment terms, and the Company believes it is probable that the Company will collect substantially all of the consideration to which the Company will be entitled in exchange for the services that will be provided to the customer.

The Company periodically enters into arrangements that include multiple promises that the Company evaluates to determine whether the promises are separate performance obligations.

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Revenue is primarily generated through the Company’s direct sales force.

Dealer revenue consists of marketplace, digital solutions, including website solutions and AccuTrade and media products sold to dealer customers, and is typically subscription-oriented in nature.

Further information related to Dealer revenue in the Consolidated Statements of Income is as follows:

• Marketplace .

• Subscription Based Products .

The Company offers dealers with subscription based packages across four capabilities:

Marketplace, Digital Experience, Media Solutions and Trade & Appraisal.

These subscription packages are generally a fixed price arrangement with varying contract terms that are automatically renewed, typically on a month-to-month basis.

The Company recognizes subscription revenue ratably as the service is provided over the contract term.

The Company's primary source of revenue is through the sale of marketplace subscription advertising packages to dealer customers.

The Company's subscription packages allow dealer customers and OEMs to showcase their new and used vehicle inventory to in-market shoppers on the Cars.com website.

The Company recognizes subscription package revenue ratably as the service is provided over the contract term.

• Digital Experience.

The Company provides services, including hosting flexible, custom-designed website platforms supporting digital retailing and messaging platform products.

The Company recognizes this subscription revenue ratably as the service is provided over the contract term.

• Trade & Appraisal.

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

The Company recognizes AccuTrade subscription revenue ratably as the service is provided over the contract term.

• Cars Commerce Media Network.

The Cars Commerce Media Network unifies our media products, including In-Market Display, Cars Social, In-Market Video and VIN Performance Media.

o Add-on Marketplace and Digital Experience products include premium advertising products that can be uniquely tailored to an individual dealer customer’s current needs.

Substantially all of the Company's add-on products are not sold separately from the subscription packages as the customer cannot benefit from add-on products on their own.

Cars.com Inc.

Notes to Consolidated Financial Statements (Continued)

Therefore, the subscription packages and add-on products are combined as a single performance obligation, and the Company recognizes the related revenue ratably as the services are provided over the contract term.

o The Company also provides certain non-subscription digital advertising services to dealer customers.

The Company recognizes revenue related to these services at the point in time the service is provided.

The Company's subscription based add-on media products include:

Cars Social, In-Market Video and VIN Performance Media.

Substantially all of the Company's add-on products are not sold separately from the subscription packages as the customer cannot benefit from add-on products on a standalone basis.

Therefore, the Company's other subscription packages and add-on products are combined as a single performance obligation, and the related revenue is recognized ratably as the services are provided over the contract term.

• Other Media Solutions.

The Company also provides certain non-subscription digital advertising services to dealer customers.

The revenue related to these services is recognized at the point in time the service is provided.

OEM and National revenue.

OEM and National revenue in the Consolidated Statements of Income largely consists of media products sold to OEMs and auto adjacent businesses, including insurance companies.

Revenue related to OEM and National customers are primarily transaction-based contracts, which are billed for impressions delivered or click-throughs on their advertisements.

An impression is the display of an advertisement to an end-user on the website and is a measure of volume.

An impression is the display of an advertisement to an end-user on the Cars.com website and is a measure of volume.

A click-through occurs when an end-user clicks on an impression.

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The Company recognizes revenue related to these services at the point in time the service is provided.

In-Market Display products revenue sold to OEMs and national customers is recorded in OEM and National revenue in the Consolidated Statements of Income.

Cars.com Inc.

Notes to Consolidated Financial Statements (Continued)

Other Revenue.

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The Company recognizes other revenue either ratably as the services are provided or at the point in time the services have been performed.

In connection with the AccuTrade Acquisition, the Company entered into an agreement to provide one of the former owners with a one-year license to a certain product.

The recognition of revenue associated with the license fee is recorded in Other revenue.

Other revenue is recorded in Other revenue in the Consolidated Statements of Income .

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The Company invests its cash and cash equivalents with highly rated financial institutions.

Note Receivable.

On October 14, 2025, the Company entered into a Security Agreement with an automotive technology solutions provider that is developing a new customer relationship management platform.

As part of this agreement, the Company invested in an $ 8.0 million secured convertible note, which has a five-year maturity, accrues interest at 4.1 % per annum and contains options to purchase the remaining outstanding equity of the provider at the Company's option.

The Company accounts for this note as a loan receivable that is held for investment, and therefore the note is measured at amortized cost.

The Company accounts for its loans held for investment using the interest method whereby interest income is recognized each period based on the effective interest rate required to amortize the deferred loan issuance costs over the life of the loans.

As of December 31, 2025, $ 8.3 million is recorded in Investments and other assets, net in the Consolidated Balance Sheets.

Investments .

Investments in non-marketable equity securities are measured at fair value with changes in fair value recognized in Net income.

The Company utilizes the measurement alternative for equity investments without readily determinable fair values and revalues these investments upon the occurrence of an observable price change for similar investments.

On at least an annual basis, the Company assesses its investments to determine whether any events have occurred, or circumstances have changed, which might have a significant adverse effect on their fair value and as applicable, may be indicative of impairment.

The RepairPal, Inc.

("RepairPal") equity investment recorded within Investments and other assets, net on the Consolidated Balance Sheets was zero as of December 31, 2023.

Prior to the sale of its RepairPal, Inc.

("RepairPal") equity investment, the Company utilized the measurement alternative for equity investments without readily determinable fair values and revalued this investment upon the occurrence of an observable price change for similar investments.

On at least an annual basis, the Company assessed its investment to determine whether any events have occurred, or circumstances have changed, which might have a significant adverse effect on their fair value and as applicable, may be indicative of impairment.

During the year ended December 31, 2024, the Company sold its RepairPal equity investment for $ 9.5 million in closing proceeds and up to $ 2.7 million of additional proceeds to be received, subject to the satisfaction of certain conditions.

The related cash proceeds for the sale were not yet received as of December 31, 2024, and was therefore recorded as a non-cash transaction.

The related cash proceeds for the sale were not yet received as of December 31, 2024, and was therefore recorded as a non-cash transaction at that time.

As a result, the Company recorded the fair value of its expected proceeds as a gain of $ 10.8 million recorded in Other income (expense), net in the Consolidated Income Statements and Gain on sale of equity investment in the Consolidated Statements of Cash Flows.

As of December 31, 2024, the Company recorded $ 9.5 million and $ 1.3 million in Other current assets and Investments and other assets, net, respectively, in the

As of December 31, 2024, the Company recorded $ 9.5 million and $ 1.3 million in Other current assets and Investments and other assets, net, respectively, in the Consolidated Balance Sheets, of which the $ 9.5 million was collected in January 2025.

As of December 31, 2025, $ 1.0 million and $ 0.3 million are rec orded in Other current assets and Investments and other assets, net, respectively, in the Consolidated Balance Sheets.

Changes will be recognized in Other income (expense), net in the Consolidated Statements of Income .

Cars.com Inc.

Notes to Consolidated Financial Statements (Continued)

Consolidated Balance Sheets, of which the $ 9.5 million was received in January 2025.

Changes will be recognized in Other income (expense), net.

Property and Equipment, net .

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18 months - 5 years

Computer hardware

Leasehold improvements

Lesser of useful life or lease term

Computer hardware

Furniture and fixtures

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Normal repairs and maintenance are expensed as incurred.

Any resulting gain or loss from the disposition of fixed assets is included in General and administrative expense on the Consolidated Statements of Income.

Any resulting gain or loss from the disposition of fixed assets is included in General and administrative expense in the Consolidated Statements of Income .

Internally Developed Technology .

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Capitalized software costs, excluding cloud computing arrangements, for the years ended December 31, 2025, 2024 and 2023 were $ 21.6 million, $ 21.4 million and $ 19.6 million, respectively.

Capitalized costs, excluding those for cloud computing arrangements, are included in Property and equipment, net on the Consolidated Balance Sheets.

Capitalized costs, excluding those for cloud computing arrangements, are included in Property and equipment, net in the Consolidated Balance Sheets.

Research and development costs are expensed as incurred.

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The Company capitalizes costs associated with the development of cloud computing arrangements in a manner consistent with internally developed technology.

Any amortization is recorded in the same manner on the Consolidated Statements of Income as the expense associated with the underlying host arrangement.

Any amortization is recorded in the same manner in the Consolidated Statements of Income as the expense associated with the underlying hosting arrangement.

Capitalized cloud computing arrangements are amortized on a straight-line basis over an estimated useful life of five years.

Amortization expense for the years ended December 31, 2025, 2024 and 2023 was $ 2.4 million, $ 1.8 million and $ 1.2 million.

Cost and accumulated amortization is as follows (in thousands):

Cost and ac cumulated amortization is as follows (in thousands):

Cloud computing arrangements, gross

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Cloud computing arrangements, net

These capitalized costs as of December 31, 2024 were $ 2.3 million and $ 6.2 million in Prepaid expenses and Investments and other assets, net on the Consolidated Balance Sheets, respectively.

These capitalized costs as of December 31, 2023 were $ 1.3 million and $ 6.5 million in Prepaid expenses and Investments and other assets, net on the Consolidated Balance Sheets, respectively.

These capitalized costs in the Consolidated Balance Sheets are as follows (in thousands):

Prepaid expenses

Investments and other assets, net

Goodwill and Other Intangible Assets .

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The reporting unit fair value also depends on the future strength of the economies the Company operates in.

New and developing competition as well as technological change could also adversely affect future fair value estimates.

New and developing competition, as well as technological changes, could also adversely affect future fair value estimates.

Due to the many variables inherent in the estimation of a reporting unit’s fair value and the relative size of the Company’s recorded goodwill, differences in assumptions could have a material effect on the estimated fair values.

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The fair-value hierarchy requires the use of observable market data when available and consists of the following levels:

• Level 1—Quoted prices for identical instruments in active markets;

Cars.com Inc.

Notes to Consolidated Financial Statements (Continued)

• Level 1—Quoted prices for identical instruments in active markets;

• Level 2—Quoted prices for similar instruments in active markets;

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• Level 3—Valuations derived from valuation techniques in which one or more significant inputs are unobservable

The Company’s financial instruments include the contingent consideration related to the Company's acquisitions which is recorded at fair value.

Financial instruments also include accounts receivable, other receivables, accounts payable and other liabilities.

The Company’s financial instruments include accounts receivable, notes receivable, other receivables, accounts payable and other liabilities.

The carrying values of these instruments approximate their fair values.

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Carrying Value

The Company measures contingent consideration recognized in connection with acquisitions at fair value on a recurring basis using significant unobservable inputs classified as Level 3 in the fair value hierarchy.

The fair value measurement has one significant input of projected financial information.

Contingent Consideration.

The Company's contingent consideration obligations are from arrangements resulting from acquisitions that involve potential future payment of consideration that is contingent upon the achievement of certain financial or performance metrics.

In the prior periods presented, the Company had contingent consideration obligations from arrangements resulting from acquisitions that involved potential future payment of consideration that was contingent upon the achievement of certain financial or performance metrics.

Contingent consideration was recognized at its estimated fair value at the date of acquisition based on expected future payment, discounted using a weighted average cost of capital in accordance with accepted valuation methodologies.

The Company reviews and reassesses the estimated fair value of contingent consideration liabilities at each reporting period and the updated fair value could differ materially from the initial estimates.

The Company measures contingent consideration recognized in connection with acquisitions at fair value on a recurring basis using significant unobservable inputs classified as Level 3 inputs.

The fair value measurement has one significant input of projected financial information.

Prior to the expiration of these arrangements, the Company reviewed and reassessed the estimated fair value of contingent consideration liabilities at each reporting period and the updated fair value could differ materially from the initial estimates.

The Company measured contingent consideration recognized in connection with acquisitions at fair value on a recurring basis using significant unobservable inputs classified as Level 3 inputs.

The fair value measurement had one significant input of projected financial information.

Significant increases or decreases to the projected financial information could result in a significantly higher or lower liability.

Foreign Currency Translation.

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and (iii) stockholders’ equity accounts at historical exchange rates.

The resulting translation adjustments are excluded from consolidated Net income and are recognized within Accumulated other comprehensive (loss) income in the Consolidated Balance Sheets.

The resulting translation adjustments are excluded from consolidated Net income and are recognized within Accumulated other comprehensive loss in the Consolidated Balance Sheets.

Foreign currency transaction gains and losses are included in Other income (expense), net in the Consolidated Statements of Income.

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Income Taxes .

Income taxes are presented on the Consolidated Financial Statements using the asset and liability method, under which deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences that exist between the financial statement carrying amount of assets and liabilities and their respective tax basis, as well as from operating loss and tax credit carryforwards.

Deferred income taxes reflect expected future tax benefits (i.e.

assets) and future tax costs (i.e.

liabilities).

The Company measures deferred tax assets and liabilities using the enacted tax rate expected to apply to taxable income in the years in which those temporary differences are expected to be recoverable or settled.

The Company recognizes the effect on deferred taxes of a change in tax rates in income in the period that includes the enactment date.

Valuation allowances are established if, based upon the

The Company accounts for income taxes according to the asset and liability method.

The effect of a tax rate change on deferred tax assets and liabilities is recognized in the Consolidated Statements of Income in the period that includes the enactment date of the change.

The Company assesses the recoverability of our deferred tax assets on a quarterly basis, considering all positive and negative evidence.

A valuation allowance is recorded against deferred tax assets if it is more likely that not that some portion of the deferred tax assets will not be realized.

Uncertain tax positions that relate to deferred tax assets are recorded against deferred tax assets.

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

The tax benefit recognized in the financial statements from such a position is measured based on the largest benefit that has a greater than 50 % likelihood of being realized upon ultimate resolution.

The Company’s uncertain tax position reserves are reviewed periodically and are adjusted as events occur that affect its estimates, such as the availability of new information, the lapsing of applicable statutes of limitation, the conclusion of tax audits, the measurement of additional estimated liability, the identification of new tax matters, the release of administrative tax guidance

Cars.com Inc.

Notes to Consolidated Financial Statements (Continued)

weight of available evidence, management determines it is "more likely than not" that some portion or all of the deferred tax asset will not be realized.

The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50 % likelihood of being realized upon ultimate resolution.

affecting its estimates of tax liabilities or the rendering of relevant court decisions.

The Company records penalties and interest relating to uncertain tax positions in Income tax expense (benefit) in the Consolidated Statements of Income.

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For further information, see Note 10 (Stock-Based Compensation).

Advertising Costs .

Adver tising Costs .

Advertising costs are expensed as they are incurred and included in Marketing and sales in the Consolidated Statements of Income.

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Cost of Revenue and Operations.

Cost of revenue and operations expense primarily consists of costs related to processing dealer vehicle inventory, product fulfillment, compensation costs for the product fulfillment and customer service teams and pay per lead products.

Defined Contribution Plans.

The Company’s employees are eligible to participate in a defined contribution plan.

Participants are eligible on their date of hire and are allowed to make tax-deferred contributions up to 90 % of annual compensation, subject to limitations specified by the Internal Revenue Code of 1986, as amended.

Participants are eligible on their date of hire and are allowed to make tax-deferred contributions up to 90 % of employees' compensation, subject to limitations specified by the Internal Revenue Code of 1986, as amended.

Employer contributions consist of matching contributions and/or non-elective employer contributions.

The Company provides a maximum match for 4 % of the employee’s salary and contributions are immediately fully vested.

The Company’s contributions to its defined contribution plans for the years ended December 31, 2024, 2023 and 2022 were $ 6.4 million, $ 6.3 million and $ 5.5 million, respectively.

The Company provides a maximum match for 4 % of the employee’s salary and contributions are immediately full y vested.

The Company’s contributions to its defined contribution plans for the years ended December 31, 2025, 2024 and 2023 were $ 6.5 million, $ 6.4 million and $ 6.3 million, respe ctively.

Recently Adopted Accounting Standards.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures ("ASU 2023-09"), which requires presentation of specific categories of reconciling items, as well as reconciling items that meet a quantitative threshold, in the reconciliation between the income tax provision and the income tax provision using statutory tax rates.

The standard also requires disclosure of income taxes paid disaggregated by jurisdiction with separate disclosure of income taxes paid to individual jurisdictions that meet a quantitative threshold of 5 percent.

This amendment was effective for fiscal years beginning after December 15, 2024, on a prospective basis and early adoption and retrospective application were permitted.

The Company has adopted ASU 2023-09 as of December 31, 2025 using the retrospective approach, and included the required disclosures in Note 12 (Income Taxes).

This standard update did not affect the Company's financial condition or results of operations.

Recently Issued Accounting Standards Not Yet Adopted .

In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03, Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40):

In December 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements , which clarifies current interim disclosure requirements and provides a comprehensive list of required interim disclosures.

The update also establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity.

Per the FASB, the amendment does not intend to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements but rather provide clarity and improve navigability of the existing interim reporting requirements.

This amendment is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted and entities are permitted to apply the new updates either prospectively or retrospectively to any or all periods presented in the financial statements.

The Company is currently evaluating this new guidance and its impact on its Consolidated Financial Statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other-Internal-Use Software (Subtopic 350-40) :

Targeted Improvements to the Accounting for Internal-Use Software , which modernizes the accounting for internal-use software costs by eliminating the stage-based model in current U.S.

GAAP and clarifying when capitalization of software development costs are appropriate.

The standard removes the concept of discrete development stages and introduces a principle-based framework centered on whether management has authorized and committed to funding the project, and whether it is probable that the project will be completed and the software will be used to perform its intended function.

This amendment is effective for annual reporting periods beginning after December 15, 2027, and for interim reporting periods beginning after December 15, 2027.

Early adoption is permitted and entities are permitted to apply the new guidance in a prospective, modified or retrospective approach.

The Company is currently evaluating this new guidance and its impact on its Consolidated Financial Statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , which requires companies to provide more detailed and organized disclosures of their expenses in their income statements.

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This amendment is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, on a prospective basis and early adoption and retrospective application is permitted.

The Company is currently evaluating this new guidance and its impact on its Consolidated Financial Statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires presentation of specific categories of reconciling items, as well as reconciling items that meet a quantitative threshold, in the reconciliation between the income tax provision and the income tax provision using statutory tax rates.

The standard also requires disclosure of income taxes paid disaggregated by jurisdiction with separate disclosure of income taxes paid to individual jurisdictions that meet a quantitative threshold.

This amendment is effective for fiscal years beginning after December 15, 2024, on a prospective basis and early adoption and retrospective application are permitted.

The Company is currently evaluating this new guidance and its impact on its Consolidated Financial Statements and related disclosures.

Recently Adopted Accounting Standards.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which requires disclosure of significant segment expenses that are regularly reviewed by the chief operating decision maker and included within each reported measure of segment profit or loss.

This amendment is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and early adoption is permitted.

The Company adopted ASU 2023-07 retrospectively effective December 31, 2024.

The adoption of this ASU affects only our disclosures, with no impacts to our financial condition or results of operations.

For more information, see Note 15 (Segment Information).

The Company is currently evaluating this new guidance and its impact on its financial statement disclosures.

Cars.com Inc.

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Business Combinations

DealerClub Acquisition.

In January 2025, the Company acquired all of the outstanding stock of DealerClub Inc.

("DealerClub"), an emerging dealer-to-dealer digital wholesale auction platform that facilitates transparent and efficient transactions between automotive dealers (the "DealerClub Acquisition").

The total purchase consideration was $ 25.3 million.

The Company expensed as incurred total acquisition costs of $ 0.2 million during the year ended December 31, 2025.

These costs were recorded in General and administrative expenses in the Consolidated Statements of Income.

As part of the DealerClub Acquisition, the Company may be required to pay additional performance-based consideration of up to $ 88.0 million, which may be paid in cash, or stock if mutually agreed upon.

This potential performance-based consideration is not included in the total purchase consideration and will be deemed compensation expense.

The amount to be paid will be determined by DealerClub's future achievement of certain revenue-related financial targets through December 31, 2028, and will be expensed over the relevant performance periods.

Purchase Price Allocation.

The fair values assigned to the tangible and intangible assets acquired and liabilities assumed were determined based on management’s final estimates and assumptions, as well as other information compiled by management, including third-party valuations that utilize customary valuation procedures and techniques, such as the replacement cost method.

The DealerClub Acquisition purchase price allocation is as follows (in thousands):

Acquisition Date

Total purchase consideration

Cash and cash equivalents (1)

Other assets acquired (1)(2)

Identified intangible assets (3)

Total assets acquired

Total liabilities assumed (4)

Net identifiable assets

Total purchase consideration

(1) During the three months ended June 30, 2025, the Company recorded a $ 0.3 million purchase accounting adjustment.

(2) Other assets acquired primarily consists of deferred income tax assets and other receivables.

(3) Identified intangible assets consists of acquired software with an amortization period of five years.

(4) Liabilities assumed primarily consists of other accrued liabilities.

A reconciliation of cash consideration to Payments for acquisitions, net of cash acquired related to the DealerClub Acquisition in the Consolidated Statements of Cash Flows is as follows (in thousands):

Cash consideration

Cash acquired (1)

Total payment for DealerClub Acquisition, net

(1) During the three months ended June 30, 2025, the Company recorded a $ 0.3 million purchase accounting adjustment.

In connection with the DealerClub Acquisition, the Company recorded goodwill in the amount o f $ 22.0 m illion, which is primarily attributable to expected sales growth from existing and future customers, product offerings, technology and the value of the acquired assembled workforce.

All of the goodwill is considered non-deductible for income tax purposes.

The DealerClub Acquisition would have had an immaterial impact on the Company’s Consolidated Financial Statements for years ended December 31, 2024 and 2023.

Cars.com Inc.

Notes to Consolidated Financial Statements (Continued)

D2C Media Acquisition.

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These costs were recorded in General and administrative expenses in the Consolidated Statements of Income.

As part of the D2C Media Acquisition, the Company may be required to pay a cumulative cash earnout of up to an additional CAD$ 34.1 million (approximately US $ 23.8 million as of December 31, 2024 ), of which CAD $ 15.0 million (approximately US$ 10.8 million) and CAD$ 4.1 million (approximately US$ 3.0 million) was expensed during the years ending December 31, 2024 and 2023, respectively.

The payment is not included in the total purchase consideration and is deemed compensation expense, as the potential cash compensation is to former equity holders who became employees and will be forfeited if employment is terminated prior to the end of the earnout period.

The amount to be paid will be determined by the acquired business’ future achievement of certain revenue-related financial targets through December 31, 2025 and expensed over each performance period.

The Company may expense up to CAD$ 15.0 million (approximately US$ 10.4 million as of December 31, 2024) associated with the remaining portion of the earnout for the year ending December 31, 2025.

As part of the D2C Media Acquisition, the Company was required to pay a cumulative cash earnout of CAD$ 34.1 million, of which CAD$ 15.0 million (approximately USD$ 10.9 million), CAD$ 15.0 million (approximately USD$ 10.8 million) and CAD$ 4.1 million (approximately USD$ 3.0 million) was expensed during the years ending December 31, 2025, 2024 and 2023, respectively.

The payment was not included in the total purchase consideration and was deemed compensation expense, as the cash compensation was to former equity holders who became employees and would have been forfeited if employment was terminated prior to the end of the earnout period.

The amount to be paid was determined by the acquired business’ achievement of certain revenue-related financial targets through December 31, 2025 and expensed over each performance period.

Purchase Price Allocation.

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(4) Other liabilities assumed primarily consists of operating lease right of use liabilities and income taxes payable.

Cars.com Inc.

Notes to Consolidated Financial Statements (Continued)

A reconciliation of cash consideration to Payments for acquisitions, net of cash acquired related to the D2C Media Acquisition in the Consolidated Statements of Cash Flows as of December 31, 2023 is as follows (in thousands):

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Total payment for D2C Media, net

In connection with the D2C Media Acquisition, the Company recorded goodwill in the amount of $ 42.0 million, which is primarily attributable to expected sales growth from existing and future customers, product offerings, technology and the value of the acquired assembled workforce.

All of the goodwill is considered non-deductible for income tax purposes.

The D2C Media Acquisition would have had an immaterial impact on the Company’s Consolidated Financial Statements for the year ended December 31, 2022.

AccuTrade Acquisition.

On March 1, 2022, the Company acquired certain of the assets and assumed certain liabilities of Accu-Trade, LLC;

Accu-Trade Canada, LLC;

Galves Market Data;

and Headstart Logistics, LLC d/b/a/ MADE Logistics (collectively, "AccuTrade"), which provides dealers with VIN-specific vehicle valuation and appraisal data, instant offer capabilities and logistics technology (the "AccuTrade Acquisition").

The Company expensed as incurred total acquisition costs of $ 2.0 million, of which $ 1.0 million were recorded during the year ended December 31, 2022.

These costs were recorded in General and administrative expenses in the Consolidated Statements of Income.

Purchase Price Allocation.

The AccuTrade Acquisition purchase price allocation is as follows (in thousands):

Acquisition-date

Cash consideration

Other consideration (1)

Contingent consideration (2)

Total purchase consideration

Assets acquired (3)

Identified intangible assets (4)

Total assets acquired

Total liabilities assumed (5)

Net identifiable assets

Total purchase consideration

(1) In connection with the AccuTrade Acquisition, the Company entered into an agreement to provide one of the former owners with a one-year license to a certain product.

The fair value of the license was determined to be $ 6.5 million, of which the Company received $ 1.2 million in cash upon the close of the AccuTrade Acquisition.

The $ 5.3 million difference between the fair value of $ 6.5 million and the $ 1.2 million in cash was recorded as non-cash consideration and the $ 6.5 million license fee was recorded in Other accrued liabilities as a contract liability on the Consolidated Balance Sheets and was amortized into Other revenue on the Consolidated Statements of Income over the one-year contract term.

The revenue related to the non-cash consideration of $ 0.9 million and $ 4.4 million for the years ended December 31, 2023 and 2022, respectively, is a non-cash reconciling item titled Amortization of deferred revenue related to AccuTrade Acquisition on the Consolidated Statements of Cash Flows.

(2) As part of the AccuTrade Acquisition, the Company may be required to pay additional consideration to the former owners based on the achievement of certain financial targets.

The Company has the option to pay consideration in cash or certain amounts in stock, which would result in a variable number of shares being issued in accordance with a calculation based on future share prices.

The amount to be paid will be determined by the acquired business’ future performance to be attained over a three-year performance period;

based on certain tiered performance metrics the maximum amount to be paid is $ 63.0 million, of which a maximum of $ 15.0 million could be in stock, with additional upside for performance that exceeds the tiered performance metrics.

The contingent consideration is classified as Level 3 in the

Cars.com Inc.

Notes to Consolidated Financial Statements (Continued)

fair value hierarchy.

The fair value is measured based on a Monte Carlo simulation.

This amount represents the estimated fair value at the time of the acquisition.

For more information on the fair value of the AccuTrade contingent consideration, see Note 4 (Fair Value Measurements).

(3) Assets acquired primarily consist of accounts receivable.

(4) Information regarding the identifiable intangible assets acquired is as follows:

Acquisition-Date

(in thousands)

Amortization Period

Acquired software

Customer relationships

(5) Total liabilities assumed primarily consist of accounts payable.

In connection with the AccuTrade Acquisition, the Company recorded goodwill in the amount of $ 76.9 million, which is primarily attributable to sales growth from existing and future technology, product offerings, customers and the value of the acquired assembled workforce.

All of the goodwill is considered deductible for income tax purposes.

Fair Value Measurements

The Company's liabilities measured at fair value on a recurring basis consisted of the following (in thousands):

Fair value measurement at reporting date

December 31, 2024

Contingent consideration

Fair value measurement at reporting date

December 31, 2023

Contingent consideration

The rollforward of the Level 3 contingent consideration from December 31, 2023 is as follows (in thousands):

December 31, 2023

Payment of Contingent Consideration

Adjustment (1)

December 31, 2024

Contingent consideration

(1) Fair value adjustments on contingent considerations are reflected within Other income (expense), net in the Consolidated Statements of Income.

The Company's contingent consideration obligations arise from acquisitions that involve a potential future payment of consideration that is contingent upon the achievement of certain financial or operational metrics.

The contingent consideration is classified in the Consolidated Balance Sheets based on expected payment dates.

As of December 31, 2024 , $ 0.5 million was included within Other accrued liabilities in the Consolidated Balance Sheets.

As of December 31, 2023 , $ 25.8 million and $ 35.6 million were included within Other accrued liabilities and Other noncurrent liabilities, respectively, in the Consolidated Balance Sheets.

For information related to the AccuTrade contingent consideration agreement, see Note 3 (Business Combinations).

The Company expects to make the remaining payments on the contingent consideration in 2025.

Cars.com Inc.

Notes to Consolidated Financial Statements (Continued)

All of the goodwill is considered non-deductible for income tax purposes.

The D2C Media Acquisition would have had an immaterial impact on the Company’s Consolidated Financial Statements for the period January 1, 2023 to October 31, 2023.

The Company's Consolidated Statements of Income provide disaggregated revenue information that reflects the nature, timing, amount and uncertainty of cash flows related to the Company's revenue.

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December 31, 2023

Additions (1)

Foreign currency translation adjustment

Other adjustments

December 31, 2024

Additions (1)

Foreign currency translation adjustment

Other adjustments (1)

December 31, 2025

(1) In connection with the D2C Media Acquisition, the Company recorded goodwill in the amount of $ 42.0 million.

The D2C Media Acquisition related goodwill was preliminary as of December 31, 2023, and was subject to an immaterial purchase accounting adjustment in 2024.

For more information on the acquisitions, see Note 3 (Business Combinations).

(1) In connection with the DealerClub Acquisition, the Company recorded goodwill in the amount of $ 22.0 million.

For more information on the DealerClub Acquisition, see Note 3 (Business Combinations).

Goodwill and Indefinite-Lived Intangible Asset Impairment Test.

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December 31, 2024

Weighted Average Remaining Useful Life (years)

Customer relationships

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Fifth Amendment to the Credit Agreement.

On May 6, 2024, the Company amended and extended its existing Credit Agreement (the "Fifth Amendment") which resulted in a new $ 350.0 million Revolving Loan due in 2029.

On May 6, 2024, the Company amended and extended its existing Credit Agreement (the "Fifth Amendment") which resulted in a new $ 350.0 million revolving loan due in 2029 ("Revolving Loan").

Upon closing, the Company borrowed $ 80.0 million under the new Revolving Loan to pay off and extinguish the outstanding $ 45.0 million in aggregate principal amount of existing Term Loan and $ 35.0 million in aggregate principal amount of existing Revolving Loan balances.

This was a non-cash transaction predominantly amongst existing lenders in the Credit Agreement and therefore is not reflected within the Consolidated Statements of Cash Flows.

This was a non-cash transaction predominantly amongst existing lenders in the Credit Agreement.

Additionally, the Fifth Amendment, among other things, removed the Secured Overnight Financing Rate (SOFR) floor and replaced the financial covenant leverage test to Senior Secured Net Leverage from Senior Secured Leverage.

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Revolving Loan.

As of December 31, 2024, $ 290.0 million was available to borrow under the Revolving Loan, and the Company had $ 60.0 million of outstanding borrowings.

The Company made $ 20.0 million in cash payments on the Revolving Loan during the year ended December 31, 2024.

There we re no cash drawdowns during the period.

As of December 31, 2025 , $ 295.0 m i llion was available to borrow under the Revolving Loan, and the Company had $ 55.0 million of outstanding borrowings.

During the year ended December 31, 2025 , the Company borrowed $ 10.0 million and made $ 15.0 million in cash payments on the Revolving Loan .

The interest rate in effect as of December 31, 2025 was 5.8 %.

The Company’s borrowings are limited by its Senior Secured Net Leverage Ratio and Consolidated Interest Coverage Ratio, which were 0.04 x and 6.5 x, respectively, as of December 31, 2024 and calculated in accordance with the Company's Credit Agreement.

During the year ended December 31, 2024 , the Company made $ 10.0 million in Term Loan payments.

In connection with the Fifth Amendment in May 2024, the Company borrowed amounts under the new Revolving Loan to fully repay the remaining outstanding principal amount under the Term Loan in a non-cash transaction.

Senior Unsecured Notes.

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Debt issuance costs related to the various amendments and issuances were $ 5.8 million and $ 7.7 million as of December 31, 2025 and 2024, respectively.

Depending on the nature of the debt issuance costs and the underlying debt to which it relates, they are recorded as either a reduction of debt and accreted using the effective interest method or as a deferred asset and accreted using the straight-line method with the amortization recorded in Interest expense, net on the Consolidated Statements of Income.

Debt Guarantors, Collateral, Covenants and Restrictions.

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The negative covenants place restrictions and limitations on the Company’s ability to incur additional indebtedness, make distributions or other restricted payments, create liens, make certain equity or debt investments, engage in mergers or consolidations and engage in certain transactions with affiliates.

As of December 31, 2024, the Company is in compliance with the covenants under its debt agreements.

At each quarter-end, the Company is subject to certain net leverage ratio and interest coverage ratio financial covenants under its Credit Agreement.

As of December 31, 2025, the Company was in compliance with the covenants under its debt agreements.

Long-term Debt Maturities.

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Excluded from these amounts are the amortization of debt issuance and other costs related to indebtedness.

As of December 31,

As of December 31, 2025, the Company’s contractual payments under then-outstanding long-term debt agreements in each of the next five calendar years and thereafter are as follows (in thousands):

Cars.com Inc.

Notes to Consolidated Financial Statements (Continued)

2024, the Company’s contractual payments under then-outstanding long-term debt agreements in each of the next five calendar years and thereafter are as follows (in thousands):

Interest Rate Swap

The interest rate on borrowings under the Company’s Term Loan is floating and, therefore, subject to fluctuations.

In order to manage the risk associated with changes in interest rates on its borrowing under the initial Term Loan, the Company entered into an interest rate swap (the "Swap") effective December 31, 2018.

The Swap expired on May 31, 2022 and, as such, is no longer recorded on the Consolidated Balance Sheets.

During the year ended December 31, 2022, $ 2.4 million was reclassified from Accumulated other comprehensive (loss) income and recorded in Interest expense, net, respectively.

During the year ended December 31, 2022, the Company made payments of $ 3.3 million related to the Swap.

During the year ended December 31, 2022, $ 0.4 million was reclassified as a tax benefit from Accumulated other comprehensive (loss) income into Income tax expense (benefit) on the Consolidated Statements of Income.

The Company is obligated as a lessee under certain non-cancelable operating leases for office space, and is also obligated to pay insurance, maintenance and other executory costs associated with the leases.

In May 2016, the Company entered into a lease of office space in Chicago, Illinois.

In November 2024, the Company amended the lease, which resulted in a reduction of its office space by 67 %, extension of the lease term from June 2031 to June 2036 for the remaining portion, and paid a termination penalty of $ 10.5 million.

In November 2024, the Company amended this lease, which resulted in a reduction of its office space by 67 %, extension of the lease term from June 2031 to June 2036 for the remaining office space, and paid a termination penalty of $ 10.5 million.

This was accounted for as a lease modification.

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Long-term lease obligations

Cars.com Inc.

Notes to Consolidated Financial Statements (Continued)

(1) The Company’s lease agreements do not provide a readily determinable implicit rate nor is it available from the Company’s lessors.

Therefore, in order to discount lease payments to present value, the Company has estimated its incremental borrowing rate based on information available at the lease commencement, modification or acquisition date.

As of December 31, 2024 and 2023 , the Company’s operating lease assets, included in Investments and other assets , net, were $ 16.8 million and $ 13.0 million, respectively, and operating lease liabilities were $ 20.6 million and $ 27.6 million, respectively, the current maturities of which is included in Other accrued liabilities and the long-term portion of which is included in Other noncurrent liabilities .

As of December 31, 2025 and 2024, the Company's operating lease balance sheet information is as follows (in thousands):

Balance sheet information:

Investments and other assets, net

Other accrued liabilities

Other noncurrent liabilities

The difference between the operating lease assets and the operating lease liabilities is primarily due to a lease incentive received related to the lease in Chicago, Illinois.

Other information related to the Company’s operating leases for the years ended December 31, 2025, 2024 and 2023 is as follows (in thousands, except months and percentages):

Cars.com Inc.

Notes to Consolidated Financial Statements (Continued)

Year Ended December 31,

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Weighted-average remaining lease term (in months)

Weighted-average discount rate as of December 31,

Weighted-average discount rate

(1) The year ended December 31, 2024 includes a termination penalty of $ 10.5 million related to the lease amendment.

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Stockholders' Equity

In February 2022, the Company's Board of Directors authorized a three-year share repurchase program to acquire up to $ 200.0 million of the Company's common stock.

On February 27, 2025, the Company announced that its Board of Directors had authorized a three-year share repurchase program to acquire up to $ 250.0 million of the Company 's common stock.

The Company may repurchase shares from time to time in open market transactions or through privately negotiated transactions in accordance with applicable federal securities laws and other applicable legal requirements.

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The Company funds the share repurchase program principally with cash from operations.

During the year ended December 31, 2024 , the Company repurchased and subsequently retired 2.8 million shares for $ 49.2 million at an average price paid per share of $ 17.72 .

Cars.com Inc.

Notes to Consolidated Financial Statements (Continued)

As of December 31, 2025, $ 173.8 million remained under the share repurchase program.

Year Ended December 31,

(in thousands, except per share data)

Aggregate purchase price

Shares repurchased

Average purchase price per share

Stock-Based Compensation

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In May 2017, the Company’s Board of Directors approved the Cars.com Inc.

Omnibus Incentive Compensation Plan (the "Omnibus Plan"), which provides for the granting of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and other stock-based and cash-based awards.

A maximum of 18.0 million common shares may be issued under the Omnibus Plan.

Omnibus Incentive Compensation Plan (the "Omnibus Plan"), which provides for the granting of new shares for stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and other stock-based and cash-based awards.

At the June 4, 2025 Annual Meeting of Stockholders, the Company's stockholders approved amendments to the Omnibus Plan to increase the maximum number of shares of the Company's common stock, par value $ 0.01 per share, that may be issued under the Omnibus Plan by 4.0 million shares to a total of 22.0 million shares and extend the term of the Omnibus Plan to June 4, 2035.

As of December 31, 2025, there were 5.8 million common shares available for future grants.

The Company issues new shares of common stock for shares delivered under the Omnibus Plan.

A copy of the Company's Amended and Restated Omnibus Incentive Compensation Plan is incorporated by reference as Exhibit 10.26 to this Annual Report on Form 10-K.

Inducement Plan.

In December 2025, the Company’s Board of Directors approved the Cars.com Inc.

2025 Inducement Equity Plan (the "Inducement Plan"), which provides for the granting of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and other stock-based and cash-based awards to individuals who were not previously employees or directors

Cars.com Inc.

Notes to Consolidated Financial Statements (Continued)

of the Company.

A maximum of 1.0 million common shares may be issued under the Inducement Plan.

As of December 31, 2025, there were 0.6 million common shares available for future grants.

The Company issues new shares of common stock for shares delivered under the Inducement Plan.

A copy of the Company's Inducement Plan is incorporated by reference as Exhibit 10.28 to this Annual Report on Form 10-K.

Information related to stock-based compensation expense is as follows (in thousands):

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General and administrative

For each of the years ended December 31, 2024 and 2023 , $ 0.3 million of capitalized internally developed technology costs is excluded from stock-based compensation expense.

Information related to outstanding stock-based compensation awards as of December 31, 2024 for restricted share units ("RSUs"), performance share units ("PSUs"), stock options and the Cars Commerce Employee Stock Purchase Plan ("ESPP") is as follows (in thousands, except for weighted-average remaining period):

(1) For the years ended December 31, 2025, 2024 and 2023, $ 0.1 million, $ 0.3 million, and $ 0.3 million, respectively, of capitalized internally developed technology costs is excluded from stock-based compensation expense.

Information related to outstanding stock-based compensation awards as of December 31, 2025 for restricted share units ("RSUs"), performance share units ("PSUs"), stock options and the Cars.com, Inc.

Employee Stock Purchase Plan ("ESPP") is as follows (in thousands, except for weighted-average remaining period):

Weighted-Average

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Stock Options

Restricted Share Units ("RSUs").

Restricted Share Units.

RSUs represent the right to receive unrestricted shares of the Company’s common stock at the time of vesting, subject to any restrictions as specified in the individual holder’s award agreement.

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Outstanding as of December 31, 2025 (1)

(1) Includes 441 RSUs that were vested, but not yet delivered.

Cars.com Inc.

Notes to Consolidated Financial Statements (Continued)

(1) Includes 376 RSUs that were vested, but not yet delivered.

The weighted-average grant-date fair value of RSUs granted during the years ended December 31, 2023 and 2022 was $ 16.72 and $ 14.21 , respectively.

The weighted-average grant-date fair value of RSUs granted during the year ended December 31, 2023 was $ 16.72 .

The total grant-date fair value of RSUs that vested during the years ended December 31, 2025, 2024 and 2023 was $ 25.4 million, $ 24.5 million and $ 19.1 million, respectively.

Performance Share Units ("PSUs").

Performance Share Units.

PSUs represent the right to receive unrestricted shares of the Company’s common stock at the time of vesting.

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Expense related to PSUs is recognized when the performance conditions are probable of being achieved.

The percentage of PSUs that shall vest will range from 0 % to 200 % of the number of PSUs granted based on the Company’s future performance related to certain revenue and adjusted earnings before interest, income taxes, depreciation and amortization, or cumulative adjusted net income per share targets over a two-year or three-year performance period.

The percentage of PSUs that shall vest will range from 0 % to 200 % of the number of PSUs granted based on the Company’s future performance over a one-year to three-year performance period related primarily to certain revenue, adjusted earnings before interest, income taxes, depreciation and amortization, cumulative adjusted net income per share targets, total shareholder return and share price targets.

These PSUs are subject to cliff vesting after the end of the respective performance period.

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Outstanding as of December 31, 2025

(1) The actual amount of shares that become common shares outstanding as of the date of vesting and delivery and will vary based on the attainment percentage of the relevant performance conditions.

The weighted-average grant-date fair value of PSUs granted during the year ended December 31, 2023 w as $ 16.47 .

Stock Options.

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Notes to Consolidated Financial Statements (Continued)

Employee Stock Purchase Plan ("ESPP").

Eligible employees may authorize payroll deductions of up to 10 % of the employee’s base earnings with a maximum of $ 10,000 per every six-month offering period to purchase Cars Commerce common stock at a purchase price per share equal to 85 % of the lower of (i) the closing market price per share of Cars Commerce at the beginning of the offering period or (ii) the closing market price per share at the end of the offering period.

Employee Stock Purchase Plan.

Eligible employees may authorize payroll deductions of up to 10 % of the employee’s base earnings with a maximum of $ 10,000 per every six-month offering period to purchase the Company's common stock at a purchase price per share equal to 85 % of the lower of (i) the closing market price per share of the Company at the beginning of the offering period or (ii) the closing market price per sh are at the end of the offering period.

A maximum of three million shares are available for issuance under the ESPP.

As of December 31, 2024 , 1.7 million shares were available for issuance under the ESPP.

The Company issued 0.2 million, 0.2 million and 0.2 million shares related to the ESPP and recorded $ 0.7 million, $ 0.8 million and $ 0.6 million of stock-based compensation expense related to the ESPP for the years ended December 31, 2024, 2023 and 2022 , respectively.

Earnings Per Share

Basic earnings per share is calculated by dividing Net income by the weighted-average number of shares of the Company's common stock outstanding.

Diluted earnings per share is similarly calculated, except that the calculation includes the dilutive effect of the assumed issuance of shares under stock-based compensation plans, unless the inclusion of such shares would have an anti-dilutive impact.

As part of the AccuTrade Acquisition, the Company may pay up to $ 15.0 million of the contingent consideration in shares of the Company's common stock at a future date.

Those potential shares have been excluded from the computations below because they are contingently issuable shares, and the contingency to which the issuance relates was not met at the end of the reporting period .

The computation of Earnings per share is as follows (in thousands, except per share amounts):

As of December 31, 2025 , 1.5 million sha res were available for issuance under the ESPP.

Information related to the ESPP is as follows (in thousands):

Year Ended December 31,

Shares issued related to the ESPP

Stock-based compensation expense related to the ESPP

Net Income Per Share

Basic net income per share is calculated by dividing Net income by the weighted-average number of shares of the Company's common stock outstanding.

Diluted net income per share is similarly calculated, except that the calculation includes the dilutive effect of the assumed issuance of shares under stock-based compensation plans, unless the inclusion of such shares would have an anti-dilutive impact.

As part of the DealerClub Acquisition, the Company may pay up to $ 88.0 million of performance-based consideration in shares of the Company's stock at a future date if mutually agreed upon.

Those potential shares have been excluded from the computations below as they are contingently issuable shares, and the contingency to which the issuance relates was not met at the end of the reporting period.

The computation of net income per share is as follows (in thousands, except per share amounts):

Year Ended December 31,

Net income (1)

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Diluted weighted-average common shares outstanding

Earnings per share, basic (1)

Earnings per share, diluted (1)

Net income per share, basic (1)

Net income per share, diluted (1)

(1) During the year ended December 31, 2023 the Company released a significant portion of its valuation allowance for deferred tax assets that had been recorded as a result of the 2020 goodwill and indefinite-lived intangible asset impairments.

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Notes to Consolidated Financial Statements (Continued)

Significant components of the income tax provision are as follows (in thousands):

Year Ended December 31,

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Income tax expense (benefit)

The income tax provision differed from amounts computed at the statutory federal income tax rate, as follows (in thousands, except percentages):

The income tax provision differed from amounts computed at the U.S.

federal statutory tax rate as follows (in thousands, except percentages):

Year Ended December 31,

Income tax provision at statutory rate

State income taxes, net of federal income tax expense

State and local income taxes, net of federal income tax effect (1)

Foreign tax effects

Provincial income taxes

Nondeductible transaction expenses

Nondeductible executive compensation

Uncertain tax positions

Effect of cross-border tax laws

Changes in valuation allowance

Nontaxable or nondeductible items

Stock-based compensation

Return to provision adjustments

Valuation allowance

Nondeductible executive compensation

Nondeductible transaction expenses

Changes in unrecognized tax benefits

Income tax expense (benefit)

(1) In 2025, the state taxes in California, Illinois, New Jersey and New York made up the majority (greater than 50%) of the tax effect in this category.

Cars.com Inc.

Notes to Consolidated Financial Statements (Continued)

Cash Taxes Paid.

Significant components of income taxes paid (net of refunds received) are as follows (in thousands):

Year Ended December 31,

state and local

* The amount of income taxes paid (net of refunds received) during the year does not meet the 5% disaggregation threshold and is included in 'Other'.

Deferred Tax Assets, Liabilities and Valuation Allowance.

The Company has recorded deferred tax assets related to federal and state income tax net operating loss ("NOL") carryforwards of approximately $ 2.9 million and $ 2.4 million as of December 31, 2024 and 2023, respectively.

The Company has recorded deferred tax assets related to federal and state income tax net operating loss ("NOL") carryforwards of approxi mately $ 20.5 million and $ 2.9 million as of December 31, 2025 and 2024, respectively.

These federal NOLs, and certain state NOLs, can be carried forward indefinitely.

The Company has also recorded deferred tax assets related to federal and state research and development ("R&D") tax credit carryforwards of $ 1.9 million and $ 1.2 million as of December 31, 2024 and 2023 , respectively.

The Com pany has also recorded deferred tax assets related to federal and state research and development ("R&D") tax credit carryforwards of $ 4.2 million and $ 1.9 million as of December 31, 2025 and 2024 , respectively.

The federal and state R&D tax credits generally may be carried forward 20 years and 5 years, respectively.

The Tax Cuts and Jobs Act enacted in December 2017 amended Internal Revenue Code Section 174 to require that specific research and experimental expenditures be capitalized and amortized over five years (15 years for non-U.S.

R&D expenditures) beginning in the Company’s 2022 fiscal year.

The Tax Cuts and Jobs Act enacted in December 2017 amended Internal Revenue Code ("IRC") Section 174 to require that specific research and experimental ("R&E") expenditures be capitalized and amortized over five years (15 years for non-U.S.

R&E expenditures) beginning in the Company’s 2022 fiscal year.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted.

The OBBBA restored immediate expensing for domestic R&E expenditures that required capitalization under IRC Section 174 and reinstated the EBITDA-based limitation for business interest expense under IRC Section 163(j).

During 2023, the Company released a significant portion of the valuation allowance that had been previously recorded against its deferred tax assets.

In connection with the sale of the Company’s RepairPal equity investment during 2024, the Company released its remaining portion of the valuation allowance.

As a result, the Company has no valuation allowance recorded as of December 31, 2024.

As a result, the Company has no valuation allowance recorded as of December 31, 2024 and 2025.

For more information on the sale, see Note 2 (Significant Accounting Policies).

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Deferred income tax assets:

Capitalized research and development costs

NOL and tax credit carryforwards

Definite lived intangibles

Capitalized research and development costs

Accrued compensation

Lease obligations

Interest expense limitation carryforward

NOL and tax credit carryforwards

Interest expense limitation

Total deferred tax assets

Valuation allowance

Net deferred tax asset

The deferred tax assets and liabilities recognized in the Company’s Consolidated Balance Sheets as of December 31, 2025 and 2024 were as follows (in thousands):

Investments and other assets, net

Other noncurrent liabilities

Deferred tax assets, net

Deferred tax liabilities, net

Net deferred tax asset

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Balance as of December 31

The Company believes it is reasonably possible that within the next twelve months the amount of the Company's uncertain tax positions may be decreased by an immaterial amount.

The Company has recorded its best estimate of the potential exposure for these issues.

As of December 31, 2024 and 2023 , the Company had $ 4.3 million and $ 2.4 million, respectively, of uncertain tax positions that, if recognized, would affect the annual tax rate.

As of December 31, 2025 and 2024 , the Company had $ 4.5 millio n and $ 4.3 million, respectively, of uncertain tax positions that, if recognized, would affect the annual tax rate.

The Company files a consolidated U.S.

federal income tax return, as well as income tax returns in various state and local jurisdictions.

The Company's tax returns are routinely audited by federal and state tax authorities and these tax audits are at various stages of completion at any given time.

The Company’s tax returns open to examination by a federal or state taxing authority are for years beginning on or after January 1, 2018.

federal income tax return, as well as income tax returns in various other jurisdictions, including in Canada.

The Company's tax returns are routinely audited by tax authorities, and these tax audits are at various stages of completion at any given time.

The Company’s tax returns open to examination by taxing authorities are for years beginning on or after January 1, 2021.

The Company believes it has adequate tax reserves to cover potential federal, state or foreign tax exposures.

Segment Information

Operating segments are components of an entity for which separate financial information is available and evaluated regularly by the chief operating decision maker (the "CODM") in deciding how to allocate resources and in assessing performance.

The Company has determined that it has a single operating and reportable segment.

The Company’s CODM is its Chief Executive Officer.

Cars.com Inc.

Notes to Consolidated Financial Statements (Continued)

Operating segments are components of an enterprise where separate financial information is available that is evaluated regularly by the chief operating decision maker (the "CODM"), or decision-making group, in deciding how to allocate resources and in assessing performance.

The Company’s CODM is the Cars Commerce Chief Executive Officer .

The CODM makes resource allocation decisions to maximize the Company’s consolidated financial results.

No asset information is provided to the CODM.

For the years ended December 31, 2024, 2023 and 2022 , the Company had one operating and reportable segment.

The Company's significant segment expenses are as follows:

Year Ended December 31,

OEM and National

Total revenue

Operating expenses:

Employee expense (1)

Marketing and advertising

Hardware, software and supplies

Stock-based compensation

Depreciation and amortization

Total operating expenses

Operating income

Nonoperating income (expense), net

Income before income taxes

Income tax expense (benefit)

(1) Employee expense excludes stock-based compensation, which is shown separately, and earnout compensation related to the D2C Media Acquisition, which is included in Other.

(2) Other primarily includes total lease cost, utilities, consulting and professional fees, earnout compensation related to the D2C Media Acquisition and travel and expense, training and conferences.

For more information on the D2C Media earnout, see Note 3 (Business Combinations).

makes resource allocation decisions to maximize the Company's consolidated financial results.

Significant expenses reviewed by the CODM are primarily limited to those that are presented in the Consolidated Statements of Income.

The significant expense categories disclosed in the December 31, 2024 Consolidated Financial Statements, except for those also presented in the Consolidated Statements of Income, are no longer regularly provided to or utilized by the CODM.

Asset information is not provided to the CODM.

For the years ended December 31, 2025, 2024 and 2023, the Company did not have any one customer that generated greater than 10% of total revenue.

Substantially all revenue and long-lived assets were generated and located within the U.S.

Subsequent Events

DealerClub Acquisition.

In January 2025, the Company acquired all of the outstanding stock of DealerClub, Inc.

("DealerClub"), an emerging dealer-to-dealer digital wholesale auction platform that facilitates transparent and efficient transactions between automotive dealers.

Cash consideration for the transaction will be approximately $ 25.3 million at closing and funded with cash on hand.

There is also the potential for additional performance-based consideration of up to $ 88.0 million through 2028, which may be paid in cash or stock.

The amount to be paid will be based on achievement of certain financial thresholds.

Share Repurchase Program.

In February 2025, the Company's Board of Directors authorized a share repurchase program to acquire up to $ 250.0 million of the Company's common stock over a three-year period.

The repurchase program may be suspended or discontinued at any time and does not obligate the Company to repurchase any specific amount or number of shares.

The Company intends to fund the share repurchase program principally with cash from operations.

Changes in and Disagreements With Accou ntants on Accounting and Financial Disclosure.

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 7. Management’s Discussion and Analysis