Online new and used car marketplace Cars.com (NYSE: CARS) met Wall Street’s revenue expectations in Q1 CY2026, but sales were flat year on year at $180.2 million. Its non-GAAP profit of $0.45 per share was 2.2% below analysts’ consensus estimates.
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Cars.com (CARS) Q1 CY2026 Highlights:
- Revenue: $180.2 million vs analyst estimates of $180.1 million (flat year on year, in line)
- Adjusted EPS: $0.45 vs analyst expectations of $0.46 (2.2% miss)
- Adjusted EBITDA: $51.02 million vs analyst estimates of $47.66 million (28.3% margin, 7.1% beat)
- Operating Margin: 9.2%, up from 3.6% in the same quarter last year
- Free Cash Flow Margin: 18.6%, up from 17% in the previous quarter
- Dealer Customers: 19,390, in line with the same quarter last year
- Market Capitalization: $638 million
"We delivered revenue growth in line with guidance in the first quarter on the back of continued Marketplace momentum and Adjusted EBITDA margin above the high end of guidance," said Tobias Hartmann, Chief Executive Officer of Cars.com, Inc.
Company Overview
Originally started as a joint venture between several media companies including The Washington Post and The New York Times, Cars.com (NYSE: CARS) is a digital marketplace that connects new and used car buyers and sellers.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Regrettably, Cars.com’s sales grew at a sluggish 3% compounded annual growth rate over the last three years. This was below our standard for the consumer internet sector and is a rough starting point for our analysis.
This quarter, Cars.com’s $180.2 million of revenue was flat year on year and in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 1.4% over the next 12 months, a slight deceleration versus the last three years. This projection doesn't excite us and suggests its products and services will face some demand challenges.
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Dealer Customers
Buyer Growth
As an online marketplace, Cars.com generates revenue growth by increasing both the number of users on its platform and the average order size in dollars.
Cars.com struggled with new customer acquisition over the last two years as its dealer customers were flat at 19,390. This performance isn't ideal because internet usage is secular, meaning there are typically unaddressed market opportunities. If Cars.com wants to accelerate growth, it likely needs to enhance the appeal of its current offerings or innovate with new products. 
Unfortunately, Cars.com’s dealer customers were once again flat year on year in Q1. The quarterly print isn’t too different from its two-year result, suggesting its new initiatives aren’t accelerating buyer growth just yet.
Revenue Per Buyer
Average revenue per buyer (ARPB) is a critical metric to track because it measures how much the company earns in transaction fees from each buyer. ARPB also gives us unique insights into a user’s average order size and Cars.com’s take rate, or "cut", on each order.
Cars.com’s ARPB fell over the last two years, averaging 1% annual declines. This signals its platform’s value is eroding when paired with its inability to grow dealer customers. If Cars.com wants to increase its buyers, it must either develop new features or provide some existing ones for free. 
This quarter, Cars.com’s ARPB clocked in at $2,473. It was flat year on year, mirroring the performance of its dealer customers.
Key Takeaways from Cars.com’s Q1 Results
We enjoyed seeing Cars.com beat analysts’ revenue and EBITDA expectations this quarter. Overall, we think this was still a solid quarter with some key areas of upside. The stock traded up 3.9% to $11.63 immediately following the results.
Indeed, Cars.com had a rock-solid quarterly earnings result, but is this stock a good investment here? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
