Dealership technology company Cars.com reported a smaller profit in the second quarter but gains in revenue and dealership customers as it navigated an ongoing vehicle inventory shortage and an economy affected by inflation and higher interest rates.
Chicago-based Cars.com on Wednesday reported net income of $5.5 million in the quarter ended June 30, down 7 percent from the same quarter a year earlier. Revenue increased 5 percent to $162.9 million, growth the company attributed largely to its dealership customer base and adoption of its digital software tools.
Revenue from automakers, including for advertising, fell 13 percent from the second quarter of 2021.
"Our platform strategy is working. Revenue is growing and diversifying, and margins are expanding. The business continues to prove resilient and sustainable," CEO Alex Vetter told analysts Wednesday. "Despite the challenges of the current environment, we have confidence in our ability to continue our growth as we rapidly accelerate our solution strategy."
Cars.com reported increased operating expenses in the second quarter, in part because of higher product and technology spending connected to the acquisitions of automotive financial technology company CreditIQ, which Cars.com acquired in November, and Accu-Trade, a provider of vehicle appraisal and valuation data and logistics technology, acquired in March.
This week, Cars.com introduced Instant Offer, a feature connected to Accu-Trade that allows consumers nationwide to receive a cash offer for their used vehicle from a participating dealership. The feature produced more than 5,000 such offers since May, when it debuted in select markets, the company said.
The company's average revenue per dealer ticked upward by 1 percent in the second quarter from a year ago, to $2,326, which Cars.com said is because of growth in its technology products.
Cars.com also reported growth in its dealership customer count. The company reported 19,517 dealership customers as of June 30, including Accu-Trade customers, 180 of which in the second quarter use only Accu-Trade. That dealership count is up by 672 as of June 30, 2021, and by 17 as of March 31.
Q2 revenue: $162.9 million, up 5% from a year earlier
Q2 net income: $5.5 million, down 7% from a year earlier
Q2 adjusted EBITDA: $45.3 million, down 7% from a year earlier
Guidance: Third-quarter revenue ranging from $163.5 million to $165.5 million; second-half revenue growth of 6% to 8%