Cars.com Doubles Q3 Net Income to $16.3 Million, Holds 2026 Outlook

Cars.com more than doubled its third-quarter net income to $16.3 million, or $0.30 per diluted share, up from $7.7 million, or $0.12 per share, a year earlier, while reaffirming its full-year outlook of flat to 2% revenue growth and a 29% to 30% adjusted EBITDA margin.

Revenue edged up slightly year over year to $181.9 million. Adjusted EBITDA rose 2% to $55.8 million, with a margin of 30.7% — beating the high end of guidance by 120 basis points. The improvement came as growth in the core marketplace business offset weakness in dealer solutions and advertising revenue. In short: the marketplace is carrying the quarter.

What drove the marketplace?

CEO Tobi Hartmann said marketplace revenue grew 5% year over year in the quarter. He cautioned, though, that websites and trade and appraisal products face near-term headwinds as their roadmaps are reshaped.

A big bet sits with smaller dealers. Cars.com launched Marketplace Starter, a self-service package with no upfront fee aimed at independent dealers. Hartmann said nearly 400 dealers had signed up, roughly 80% of their inventory priced below $20,000. More than 60% of eligible signups were fully self-service. The package has limits, including on leads, and the company is weighing additional services and upgrade options.

CFO Sonia Jain said starter dealers were excluded from the third-quarter dealer count and did not affect average revenue per dealer. Over time, she said, the offering would likely dilute ARPD once a conversion feature is built — its primary goal being more attractive listings on the platform. The dealer base runs roughly two-thirds franchise and one-third independent, an estimated 20% to 25% penetration among independents. Across paid and free packages, Cars.com added close to 600 independent dealers year over year.

Third-quarter ARPD rose 3% to $2,532, driven largely by higher-tier marketplace subscriptions. Premium+ adoption exceeded 12% of the subscription mix, against a year-end goal of 15%. ARPD is climbing even as the company courts smaller dealers.

Where do traffic and AI fit?

Hartmann said the Carson AI shopping assistant surpassed 1 million monthly users during the quarter, nearly double its base a year earlier. Cars.com is also building an integration with Muse to surface listings and dealers to more users.

Marketplace traffic and visitors fell by a mid-single-digit percentage year over year — a smaller decline than in the first half. Hartmann said the company has prioritized high-intent shoppers and lead conversion over raw volume, with lead performance rising nearly double digits. Organic traffic also grew. In the fourth quarter, Dealer Inspire websites will gain AI-generated vehicle videos plus shopper tools for search, recommendations and vehicle-detail summaries.

Jain said the consolidated dealer count declined year over year on lower website subscriptions. Hartmann said Cars.com aims to stabilize website development and improve its growth outlook in 2027, and does not view buying and selling vehicles itself as core — positioning the platform as a transaction facilitator instead.

What about costs, cash and capital returns?

Operating expenses fell 7% year over year to $153 million. Jain said roughly half the improvement came from lower costs and efficiencies; the rest reflected lower depreciation after customer lists tied to the 2017 spin-off were fully amortized. Hartmann said organizational and cost-containment efforts generated $30 million to $35 million in discrete annualized savings.

Free cash flow for the first nine months reached $97.3 million, up from $94.5 million. The company repurchased 7.6 million shares for $74 million through the third quarter and remains on pace for its $90 million full-year target. Debt stood at $445 million at September 30, with liquidity of $369.6 million.

On guidance, Jain said revenue should land toward the lower end of the range and margin toward the higher end. OEM and national revenue fell 3% year over year but rose 15% from the second quarter; Jain said 2027 talks with automakers have been positive.

Hartmann also welcomed Trent Ziegler as incoming CFO and Mausam Bhatt as chief product officer, with Jain staying on to help with the CFO transition. The profit doubled; the strategy now rests on converting it into growth.