Cars.com Q3 Adjusted EBITDA Hits Record as Revenue Holds Steady

Cars.com Inc. reported nearly flat third-quarter revenue but record adjusted EBITDA, as growth in its core marketplace business and lower operating costs offset weaker OEM and national advertising revenue. The company also reaffirmed its full-year 2026 outlook and $90 million share-repurchase target.

Revenue for the quarter ended in 2026 was $181.9 million, up slightly from $181.6 million a year earlier and 1% higher sequentially. Adjusted EBITDA, a non-GAAP measure, rose 2% year over year to a record $55.8 million from $54.6 million. The adjusted EBITDA margin increased by about 60 basis points to 30.7%, exceeding the company’s guidance range of 28.5% to 29.5% and marking the third consecutive quarter above its guided range.

Operating expenses declined 7% from the prior-year period, while adjusted operating expenses fell 5%. Cars.com attributed the adjusted reduction to lower depreciation and amortization and more efficient marketing investments.

Marketplace growth supports dealer revenue

Dealer revenue increased 1% year over year to $163.4 million from $162.0 million, driven by 5% growth in marketplace revenue. Cars.com said the marketplace result reflected continued customer adoption and value delivery. OEM and national revenue declined 3% from a year earlier but increased 15% from the second quarter, reflecting the sequential improvement in OEM advertising that the company had expected.

Average monthly revenue per dealer rose 3% to $2,532, its highest level since the third quarter of 2023. Positive contributions from marketplace products were partly offset by lower media-product revenue.

Total dealer customers decreased 1% to 19,251 from 19,526. The company said marketplace dealer customers increased year over year, while its self-service Marketplace Starter package had reached 383 independent dealers since launching in June. Those Starter subscriptions are free and are not included in the reported dealer-customer total.

Website subscriptions declined 6% to approximately 7,380. Cars.com said its website strategy remains focused on product development, data intelligence and customer value, including the integration of natural-language search, vehicle recommendations and AI-generated vehicle summaries. AI-enabled vehicle identification number videos for dealer websites were scheduled to launch in the fourth quarter.

Product investment continues alongside cost reductions

Cars.com highlighted several changes intended to make vehicle listings more useful and improve trust within its marketplace. These include dealer-verified condition reports, clearer disclosure of dealer fees, shipping-cost estimates based on shopper ZIP codes, vehicle-condition histories and AI-generated seller notes and dealer-review summaries.

Ask Carson, the company’s AI shopping assistant, reached 1 million monthly shoppers during the quarter. Cars.com also reported roughly double-digit year-over-year growth in lead volume and said more than 60% of third-quarter traffic was organic. Average monthly unique visitors nevertheless declined to 24.7 million from 25.5 million, while quarterly visits fell to 150.2 million from 156.2 million.

The company continued a cost-reduction program initiated in April 2026, when it announced an approximately 11% reduction in full-time roles. About 20% of the eliminated positions were in management and executive layers. Cars.com expects its discrete cost initiatives to generate aggregate annualized operating savings of $30 million to $35 million. It has also eliminated product-based silos within the sales organization and is taking additional steps to align resources with its marketplace roadmap.

Outlook and capital returns

Cars.com reaffirmed its full-year 2026 outlook for revenue ranging from flat to 2% growth and an adjusted EBITDA margin of 29% to 30%. It also maintained its $90 million share-repurchase target for the year.

Through September 30, the company had repurchased 7.6 million shares for $73.6 million and deployed approximately 80% of free cash flow toward buybacks. Free cash flow is defined as operating cash flow less capital expenditures, including property and equipment purchases and capitalized internally developed technology.

The outlook remains subject to the uncertainties described in the company’s regulatory filings. The presentation also showed continued pressure in several operating measures, including total dealer customers, website subscriptions, audience traffic and year-over-year OEM and national revenue. Adjusted EBITDA, adjusted operating expenses and free cash flow are non-GAAP measures and may not be directly comparable with similarly named metrics reported by other companies.