CARS Expects Strong Q3

By Staff Writer October 16, 2020

CARS, a digital marketplace and solutions provider for the automotive industry, announced strong business momentum in its preliminary results for the third quarter of 2020.

Based on preliminary information, CARS expects third quarter revenue of approximately $142 to $144 million and an Adjusted EBITDA margin between 33 percent and 34 percent. A measured approach to investment in the business helped drive a strong estimated quarterly Adjusted EBITDA margin and year-over-year growth in Adjusted EBITDA. CARS continues to work to reduce leverage and optimize its capital structure.

“The digital car-buying market has strengthened and dealer customers are further leveraging our unique digital solutions to drive profitable sales,” said Alex Vetter, president and CEO of CARS. “Our preliminary results show continued momentum in our business with all-time high retention rates, sequential growth in dealer customers and ARPD and year-over-year growth in traffic and Adjusted EBITDA.”

Additionally, based on preliminary results, net loss for the third quarter is expected to be between $10 and $12 million, primarily due to an approximately $31 million noncash charge for the correction of an error related to the calculation of the valuation allowance for income taxes established in connection with an impairment recorded in the first quarter of 2020. The adjustment is not material in the context of CARS’ first quarter net loss of $787 million, which was primarily the result of a $906 million impairment charge, and thus is being recorded in the third quarter. This noncash adjustment will be recorded within the income tax line of the financial statements and has no impact on Adjusted EBITDA or Free Cash Flow. 

CARS ended the third quarter of 2020 with approximately $44 million of cash and cash equivalents and $598 million in debt outstanding after paying down approximately $48 million in debt during the quarter. 

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Last modified on Friday, 16 October 2020 14:13