Dealership tech company Cars.com returned to profitability in the fourth quarter on gains from organic growth and acquisitions, although customers of the digital dealership marketplace continued to decline.
“We have served consumers, dealers, OEMs and lenders in an environment that has been challenging for many,” Cars.com CEO alex Vetter said during the company's conference call Thursday.
Wall Street liked the report. Cars.com Stocks rose nearly 16 percent to $20.11 in Thursday afternoon trade.
The company reported net income of $10.3 million for the quarter ended December 31, compared to a net loss of $2.9 million a year earlier. Cars.com generated net income of $17.2 million for all of 2022, up from $10.8 million in 2021.
Fourth-quarter revenue increased 6 percent to $168.2 million. For the year, revenue reached $653.9 million, up 5 percent from 2021. Average monthly revenue per retailer was $2,361, up $28 from the prior year.
Cars.com reported 19,506 dealership customers at the end of 2022, down 79 from the third quarter but up 327 from 2021. The quarterly decline is due to terminations related to a single digital dealership, and the company expects that customer to remain in place through the withdrawal first quarter of 2023.
“There are a number of digital merchants out there who have experienced weakness in their own business as they figure out which model works best for them,” CFO Sonia Jain said during the call, adding that the company follows the trend at least since then, followed since the second quarter of 2022. At the same time, Jain said, the overall dealer customer base remains strong, “especially in this current inventory-scarce environment.”
Digital marketing arm Dealer Inspire's customers reached 6,050 at the end of 2022, up 700 from 2022. Cars.com's Accu-Trade Connected platform reached 500 dealer customers during the year, the company said. The company acquired Accu-Trade, a provider of vehicle appraisal and appraisal data and logistics technology, in 2022 and bought CreditIQ, a financial technology company, in 2021 and both were integrated into the operations during the year.
Q4 sales: $168.2 million, up 6 percent year-on-year
net income Q4: $10.3 million compared to a net loss of $2.9 million last year
Revenue 2022: $653.9 million, up 5 percent from 2021
2022 net income: $17.2 million compared to $10.8 million in 2021
Q4 underlying EBITA: $49.5 million, up $2.7 million year-on-year
2023 guide: Full sales growth of 3 to 6 percent