Dealership technology company Cars.com returned to a profit in the fourth quarter with gains from organic growth and acquisitions, even as digital dealer marketplace customers continued pulling back.
“We helped consumers, dealers, OEMs and lenders in an environment that challenged many,” Cars.com CEO Alex Vetter said during the company’s Thursday earnings call.
Wall Street liked the report. Cars.com shares gained nearly 16 percent to $20.11 in afternoon trading on Thursday.
The company swung to a net profit of $10.3 million for the quarter ending Dec. 31 from a net loss of $2.9 million a year earlier. Cars.com generated $17.2 million in net income for all of 2022, up from $10.8 million in 2021.
Fourth-quarter revenue jumped 6 percent to $168.2 million. For the year, revenue reached $653.9 million, a 5 percent jump from 2021. Monthly average revenue per dealer came in at $2,361, up $28 from the previous year.
Cars.com reported 19,506 dealer marketplace customers at the end of 2022, down 79 from the third quarter but 327 higher compared with 2021. The quarterly drop came from cancellations relating to a single digital dealer, and the company said it expects that customer to continue pulling back through the 2023 first quarter.
“There are a number of digital dealers out there who have been experiencing softness in their own business as they figure out what model works best from them,” CFO Sonia Jain said during the call, adding the company has been following the trend since at least since the 2022 second quarter. At the same time, Jain said, the overall dealer customer base remains strong, “particularly in this current lean inventory environment.”
Customers for digital marketing arm Dealer Inspire hit 6,050 at the end of 2022, which was 700 higher than in 2022. Cars.com’s Accu-Trade Connected platform reached 500 dealer customers during the year, the company said. The company in 2022 acquired Accu-Trade, a provider of vehicle appraisal and valuation data and logistics technology, and in 2021 bought CreditIQ, a financial technology company, and both were integrated into operations during the year.
Q4 revenue: $168.2 million, 6 percent higher than last year
Q4 net income: $10.3 million, vs. a $2.9 million net loss the previous year
2022 revenue: $653.9 million, 5 percent higher than in 2021
2022 net income: $17.2 million, compared with $10.8 million in 2021
Q4 adjusted EBITA: $49.5 million, $2.7 million higher compared with the previous year
2023 guidance: Full revenue growth of 3 percent to 6 percent