Cars.com’s first quarter results were met with a negative market reaction as both revenue and adjusted profit missed Wall Street expectations. Management attributed the challenges to external factors, especially industry-wide uncertainty stemming from new automotive tariffs, which affected both dealer and automaker (OEM) advertising commitments. CEO Alex Vetter noted, “Late in the quarter, there were early signs from a handful of OEMs looking to more closely manage their media commitments.” CFO Sonia Jain pointed to ongoing cost discipline, but also acknowledged that severance-related costs and integration efforts weighed on operating margins.

Is now the time to buy CARS? Find out in our full research report (it’s free).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions Cars.com’s Q1 Earnings Call

• Naved Khan (B. Riley Securities) asked about the impact of tariffs on both OEM/dealer ad spending and used car volumes. CEO Alex Vetter responded that while tariffs drove higher consumer traffic and dealer engagement, OEM advertising visibility became less predictable.

• Rajat Gupta (JPMorgan) questioned what drove the margin upside in Q1. CFO Sonia Jain credited lower-than-expected integration costs and operational discipline but noted that benefits from targeted headcount reductions would be more visible in future quarters.

• Tom White (Davidson) inquired about the sequential improvement in the marketplace business. Vetter explained that dealer pullbacks in Q4 reversed as consumer demand stayed strong, leading some dealers to return to the platform in February and March.

• Marvin Fong (BTIG) asked about Dealer Club’s rapid user growth and monetization strategy. Vetter highlighted strong onboarding and integration with AccuTrade but said monetization on the seller side would be considered after building further market share.

• Joe Spak (UBS) pressed for clarity on Cars.com’s visibility into OEM ad spending. Jain acknowledged ongoing uncertainty, noting that small shifts in OEM/national spend could meaningfully impact guidance, and that commitments remain largely short term.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will be watching (1) how effectively Cars.com converts its pipeline for AccuTrade and Dealer Club into recurring revenue, (2) the stability of OEM and dealer advertising commitments amid continued tariff-driven uncertainty, and (3) Cars.com’s ability to sustain consumer engagement through new editorial content and product enhancements. Execution on renegotiating legacy web service agreements and integration of acquired platforms will also be monitored for progress.

Cars.com currently trades at $11.87, up from $11.32 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

High-Quality Stocks for All Market Conditions

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.