Cars.com Inc. (CARS): Business Model Canvas [11-2024 Updated]
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Cars.com Inc. (CARS) Bundle
Cars.com Inc. (CARS) has transformed the automotive marketplace with its robust business model, designed to cater to the evolving needs of car buyers and dealers alike. This blog post delves into the intricacies of its Business Model Canvas, highlighting key components such as
- partnerships with automotive OEMs and dealerships
- innovative digital solutions
- revenue streams from subscriptions and advertising
Cars.com Inc. (CARS) - Business Model: Key Partnerships
Collaborations with automotive OEMs
Cars.com Inc. maintains strategic partnerships with various automotive original equipment manufacturers (OEMs) to enhance its marketplace offerings and consumer outreach. For the nine months ended September 30, 2024, OEM and National revenue represented 9% of total revenue, amounting to $48.1 million, an increase of $7.7 million or 19% year-over-year. This growth is attributed to increased OEM spending aimed at raising consumer awareness as inventory levels on dealer lots rise.
Partnerships with dealerships and dealer associations
Cars.com collaborates extensively with dealerships, which are its primary revenue source. Dealer revenue accounted for 89% of total revenue for the nine months ended September 30, 2024, totaling $481.2 million, marking a $20.9 million increase or 5% compared to the previous year. The company reported having 19,255 dealer customers as of September 30, 2024, up 3% from the previous year. Monthly Average Revenue Per Dealer (ARPD) was $2,478, reflecting a 3% decline compared to the previous year.
| Metric | Value (2024) | Value (2023) | % Change |
|---|---|---|---|
| Total Revenue from OEM and National | $48.1 million | $40.5 million | 19% |
| Total Dealer Revenue | $481.2 million | $460.3 million | 5% |
| Dealer Customers | 19,255 | 18,715 | 3% |
| Monthly Average Revenue Per Dealer | $2,478 | $2,548 | -3% |
Third-party service providers for technology and data
Cars.com partners with third-party service providers to enhance its technological capabilities and data analytics. The product and technology expenses for the nine months ended September 30, 2024, increased by $10.5 million to $84.9 million, representing 16% of total revenue. This increase is largely attributed to higher compensation costs and expenses associated with third-party technology solutions, including software licenses and consulting services.
Cars.com Inc. (CARS) - Business Model: Key Activities
Development and maintenance of digital platforms
The core activity of Cars.com Inc. revolves around the development and maintenance of its digital platforms. As of September 30, 2024, Cars.com reported total revenue of $538.7 million, with a significant portion derived from its platform services. The product and technology expenses, which encompass the costs associated with maintaining these digital platforms, amounted to $84.9 million for the nine months ended September 30, 2024, reflecting a 14% increase from the previous year. This rise is attributed to higher compensation costs and third-party expenses related to technology services.
Marketing and sales strategies to attract dealers
Cars.com primarily generates revenue through dealer subscriptions, which contributed 89% of total revenue for the nine months ended September 30, 2024. The marketing and sales expenses for the same period were $177.7 million, showing a slight increase of 1% year-over-year. The company actively engages in various marketing strategies to attract and retain dealer customers, including digital advertising and promotional campaigns. The Monthly Average Revenue Per Dealer (ARPD) stood at $2,478 for the three months ended September 30, 2024, reflecting a decrease of 3% compared to the previous year.
Customer support and service management
Customer support is a critical activity for Cars.com, ensuring a seamless experience for both dealers and car shoppers. The company invests in customer service teams and technology to enhance user satisfaction. As of September 30, 2024, the total operating expenses for customer support and service management, which fall under general and administrative costs, were reported at $67.3 million. The provision for doubtful accounts, indicative of the company’s approach to managing customer-related financial risks, totaled $2.6 million for the nine months ended September 30, 2024.
| Key Activity | Financial Metric | Amount (in millions) | Year-over-Year Change (%) |
|---|---|---|---|
| Revenue from Digital Platforms | Total Revenue | 538.7 | 6 |
| Product and Technology Expenses | Expenses | 84.9 | 14 |
| Marketing and Sales Expenses | Expenses | 177.7 | 1 |
| Monthly Average Revenue Per Dealer | ARPD | 2.478 | -3 |
| General and Administrative Expenses | Expenses | 67.3 | 25 |
Cars.com Inc. (CARS) - Business Model: Key Resources
Proprietary technology and platform infrastructure
Cars.com Inc. relies heavily on its proprietary technology to deliver its services. The company has invested significantly in its platform, with product and technology expenses reaching $84.9 million for the nine months ended September 30, 2024, compared to $74.4 million for the same period in 2023, marking an increase of 14%. This investment supports the development of user-friendly interfaces and enhances the digital experience for both consumers and dealer customers.
As of September 30, 2024, Cars.com reported a total liquidity of $329.6 million, which includes cash and cash equivalents of $49.6 million and undrawn Revolving Loan facilities. This liquidity supports ongoing technology enhancements and operational capabilities.
A large audience of in-market car shoppers
Cars.com attracts a substantial audience, crucial for its marketplace. The key operating metrics reveal that the average monthly unique visitors (UVs) were 26.3 million for the nine months ended September 30, 2024, though this represents a slight decline of 3% from the same period in 2023. Additionally, the total traffic to the platform increased by 2% year-over-year, totaling approximately 483.8 million visits during the same timeframe.
The ability to reach a large number of in-market car shoppers is a significant asset, as it enhances the attractiveness of the platform to dealers and OEMs, facilitating higher engagement and monetization opportunities through advertisements and listings.
Brand equity and recognition in the automotive space
Cars.com has established a strong brand presence in the automotive marketplace. The company’s dealer revenue, which constitutes 89% of its total revenue for the nine months ended September 30, 2024, reached $481.2 million, an increase of 5% from $460.3 million in the previous year. This growth is indicative of the brand's strength and recognition among consumers and dealers alike.
Moreover, Cars.com’s marketing efforts, which accounted for 33% of total revenue, were strategically directed to maintain and enhance brand visibility. The company’s efforts in brand equity are further reflected in the increase of OEM and national revenue by 19% year-over-year, indicating effective brand positioning and recognition in the automotive space.
| Key Metrics | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Revenue | $179.7 million | $174.3 million | 3% |
| Net Income | $18.7 million | $4.5 million | 317% |
| Average Monthly Unique Visitors (UVs) | 26.3 million | 27.1 million | (3%) |
| Dealer Revenue | $481.2 million | $460.3 million | 5% |
| OEM and National Revenue | $48.1 million | $40.5 million | 19% |
Cars.com Inc. (CARS) - Business Model: Value Propositions
Comprehensive digital solutions for car buying and selling
Cars.com offers a variety of digital solutions aimed at enhancing the car buying and selling experience. This includes features such as online vehicle listings, search filters, virtual vehicle tours, and customer reviews, which together facilitate informed purchasing decisions. As of September 30, 2024, total revenue from digital experiences accounted for approximately $159.5 million, representing a 2% increase year-over-year.
Enhanced visibility and marketing for dealers
The company provides marketing services that significantly enhance the visibility of dealer inventories. For the three months ended September 30, 2024, dealer revenue constituted 89% of total revenue, up from 90% during the same period in 2023. This revenue stream increased by $2.4 million, primarily due to the growth in digital experience offerings.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Dealer Revenue ($ million) | 159.5 | 157.1 | +2.4 |
| OEM and National Revenue ($ million) | 17.0 | 14.5 | +2.5 |
| Other Revenue ($ million) | 3.1 | 2.7 | +0.4 |
| Total Revenue ($ million) | 179.7 | 174.3 | +5.4 |
Data-driven insights and analytics for decision-making
Cars.com leverages data analytics to provide insights into market trends and consumer behavior, which are crucial for dealers and OEMs. The average monthly unique visitors to the platform decreased by 6% year-over-year, indicating a shift in consumer engagement patterns. However, dealer customers increased by 3% over the same period, suggesting that the platform continues to attract dealers despite fluctuations in consumer traffic.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Average Monthly Unique Visitors (thousands) | 24,547 | 25,980 | -1,433 |
| Dealer Customers | 19,255 | 18,715 | +540 |
| Monthly Average Revenue Per Dealer ($) | 2,478 | 2,548 | -70 |
Cars.com Inc. (CARS) - Business Model: Customer Relationships
Strong focus on customer service and support
Cars.com Inc. emphasizes strong customer service as a core component of its business model. The company has established robust support mechanisms to assist customers throughout their car buying and selling experience. As of September 30, 2024, the company reported a net income of $30.9 million, reflecting its commitment to enhancing customer satisfaction and support. The customer support team is equipped to handle inquiries and provide assistance across various digital platforms, contributing to a positive customer experience.
Regular engagement through digital channels
Cars.com engages its customers through various digital channels to maintain and enhance relationships. The company reported an average of 26.3 million monthly unique visitors over the nine months ended September 30, 2024, indicating a slight decrease of 3% from the previous year. This level of engagement is crucial in driving traffic and maintaining visibility in the competitive automotive marketplace. The company's digital strategy includes personalized communications and targeted marketing initiatives, which are essential for customer retention and engagement.
Loyalty programs and incentives for repeat customers
To incentivize repeat business, Cars.com has implemented loyalty programs that reward returning customers. As of September 30, 2024, dealer revenue constituted 89% of total revenue, amounting to $481.2 million for the nine months ended September 30, 2024, a 5% increase compared to the prior year. These loyalty programs not only foster customer retention but also enhance dealer relationships by encouraging ongoing transactions through the platform.
| Metrics | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Net Income ($ millions) | 30.9 | 110.1 | -72 |
| Average Monthly Unique Visitors (millions) | 26.3 | 27.1 | -3 |
| Dealer Revenue ($ millions) | 481.2 | 460.3 | 5 |
| Percentage of Total Revenue from Dealer Revenue | 89% | 90% | -1 |
Cars.com Inc. (CARS) - Business Model: Channels
Online marketplace platform
The Cars.com platform serves as an online marketplace connecting car buyers with dealers. For the nine months ended September 30, 2024, Cars.com reported a total revenue of $538.7 million, with dealer revenue constituting 89% of this total, amounting to approximately $481.2 million . The platform's traffic increased by 2% year-over-year, reaching a total of 483,773 visits during the same period .
| Metric | Value |
|---|---|
| Total Revenue (9 months 2024) | $538.7 million |
| Dealer Revenue (9 months 2024) | $481.2 million |
| Traffic (9 months 2024) | 483,773 visits |
Mobile applications for car buyers and dealers
Cars.com has developed mobile applications tailored for both car buyers and dealers. The applications facilitate the buying process through features such as vehicle listings, price comparisons, and dealer reviews. As of September 30, 2024, the company reported an average monthly unique visitor count of 24,547, a decrease of 6% compared to the previous year . This decline is attributed to various market factors, including increased vehicle inventory and higher interest rates affecting consumer behavior.
| Metric | Value |
|---|---|
| Average Monthly Unique Visitors (Sept 2024) | 24,547 |
| Year-over-Year Change in Unique Visitors | -6% |
Social media and digital advertising
Cars.com leverages social media and digital advertising to enhance brand visibility and attract potential buyers. The marketing and sales expenses for the company totaled $177.7 million for the nine months ended September 30, 2024, representing 33% of total revenue . Digital advertising efforts are integrated with the online platform to drive traffic and engagement, contributing to a 3% increase in total revenue compared to the previous year.
| Metric | Value |
|---|---|
| Marketing and Sales Expenses (9 months 2024) | $177.7 million |
| Percentage of Total Revenue | 33% |
| Year-over-Year Revenue Growth | 3% |
Cars.com Inc. (CARS) - Business Model: Customer Segments
Individual car buyers seeking vehicles
Cars.com primarily serves individual car buyers through its online marketplace, providing a platform for users to search for new and used vehicles. As of September 30, 2024, the platform attracted an average of 26,329 monthly unique visitors, down from 27,136 in the previous year, indicating a 3% decline in engagement.
Automotive dealerships looking for marketing solutions
Cars.com generates substantial revenue from automotive dealerships, which rely on the platform for marketing solutions. Dealer revenue accounted for approximately 89% of total revenue for the nine months ended September 30, 2024, amounting to $481.2 million, a 5% increase from $460.3 million in the same period of 2023. The number of dealer customers increased by 3% year-over-year, reaching 19,255.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Dealer Revenue ($ million) | 159.5 | 157.1 | 2% |
| Dealer Customers | 19,255 | 18,715 | 3% |
| Monthly Average Revenue Per Dealer ($) | 2,478 | 2,548 | -3% |
OEMs aiming to increase brand awareness
Original Equipment Manufacturers (OEMs) also constitute a key customer segment for Cars.com. OEM and National revenue represented 9% of total revenue, reaching $48.1 million for the nine months ended September 30, 2024, which is a 19% increase from $40.5 million in the prior year. This growth is attributed to increased OEM spending aimed at enhancing consumer awareness amidst rising vehicle inventory levels.
| OEM Revenue ($ million) | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| OEM Revenue | 17.0 | 14.5 | 17% |
Cars.com Inc. (CARS) - Business Model: Cost Structure
Significant expenses in marketing and sales
For the nine months ended September 30, 2024, Cars.com incurred $177.7 million in marketing and sales expenses, representing an increase of 1% compared to $176.6 million during the same period in 2023. This expense accounted for 33% of total revenue for the period, down from 35% in the previous year.
The breakdown of marketing and sales expenses for the three months ended September 30, 2024, was $58.3 million, showing a decrease of 3% from $60.2 million in the same quarter of 2023. This decrease was primarily attributed to changes in marketing investment and mix.
| Period | Marketing and Sales Expenses ($ millions) | % of Total Revenue | % Change |
|---|---|---|---|
| Q3 2024 | 58.3 | 32% | -3% |
| Q3 2023 | 60.2 | 35% | |
| 9M 2024 | 177.7 | 33% | +1% |
| 9M 2023 | 176.6 | 35% |
Technology development and maintenance costs
Technology development and maintenance expenses for Cars.com totaled $84.9 million for the nine months ended September 30, 2024, which is a 14% increase from $74.4 million in the prior year. This expense represented 16% of total revenue for the period.
For the three months ended September 30, 2024, technology-related expenses amounted to $29.2 million, an increase of 16% compared to $25.3 million in Q3 2023. The rise in expenses is largely due to increased compensation, including stock-based compensation, and higher third-party costs for software licenses.
| Period | Technology Development and Maintenance Costs ($ millions) | % of Total Revenue | % Change |
|---|---|---|---|
| Q3 2024 | 29.2 | 16% | +16% |
| Q3 2023 | 25.3 | ||
| 9M 2024 | 84.9 | 16% | +14% |
| 9M 2023 | 74.4 |
General and administrative overhead
General and administrative expenses for Cars.com reached $67.3 million for the nine months ended September 30, 2024, reflecting a significant increase of 25% from $53.7 million in the same period in 2023. This expense accounted for 13% of total revenue for the period, compared to 11% the previous year.
In Q3 2024, general and administrative costs amounted to $21.5 million, up from $17.8 million in Q3 2023, marking a 21% increase. The rise is attributed to higher compensation costs and expenses related to the D2C Media business.
| Period | General and Administrative Expenses ($ millions) | % of Total Revenue | % Change |
|---|---|---|---|
| Q3 2024 | 21.5 | 12% | +21% |
| Q3 2023 | 17.8 | ||
| 9M 2024 | 67.3 | 13% | +25% |
| 9M 2023 | 53.7 |
Cars.com Inc. (CARS) - Business Model: Revenue Streams
Dealer subscriptions and marketplace fees
Dealer revenue is the largest revenue stream for Cars.com, comprising 89% of total revenue for the three months ended September 30, 2024, and 90% for the same period in 2023. For the nine months ended September 30, 2024, dealer revenue amounted to $481.2 million, reflecting an increase of $20.9 million or 5% compared to $460.3 million in 2023. This growth was primarily driven by the addition of the D2C Media business and increased digital experience revenue, including website solutions and media products sold to dealer customers. The average monthly revenue per dealer was $2,478 for the three months ended September 30, 2024, a 3% decrease from $2,548 in 2023.
OEM and national advertising revenues
OEM and national advertising revenues represented 9% of Cars.com's total revenue for the three months ended September 30, 2024, up from 8% in the same period of 2023. For the nine months ended September 30, 2024, OEM and national revenue totaled $48.1 million, an increase of $7.7 million or 19% from $40.5 million in 2023. This growth was attributed to increased spending by OEMs aimed at raising consumer awareness amidst rising vehicle inventory.
Digital media and data services sales
Other revenues, which include digital media and data services, accounted for approximately 2% of total revenue for both the three and nine months ended September 30, 2024. This segment generated $9.4 million for the nine months ended September 30, 2024, up from $8.8 million in 2023, marking an increase of $0.6 million or 7%. The growth in this area was primarily due to the addition of the D2C Media business.
| Revenue Stream | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | Change (in millions) | Change (%) |
|---|---|---|---|---|
| Dealer Revenue | $159.5 | $157.1 | $2.4 | 2% |
| OEM and National Revenue | $17.0 | $14.5 | $2.5 | 17% |
| Other Revenue | $3.1 | $2.7 | $0.4 | 17% |
| Total Revenue | $179.7 | $174.3 | $5.4 | 3% |
Updated on 16 Nov 2024
Resources:
- Cars.com Inc. (CARS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Cars.com Inc. (CARS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Cars.com Inc. (CARS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.