Cars.com lost money in the third quarter on lower revenue, though the dealership services company showed signs its business is recovering from the effects of the coronavirus pandemic.
The Chicago company, which provides vehicle listings and other dealership services, reported Monday that it posted a net loss of $12.3 million in the quarter that ended Sept. 30. That compares with a net loss of $426.2 million in the third quarter of 2019, which included a charge against earnings related to the end of a nearly yearlong strategic review process.
Cars.com said Monday that its net loss in the third quarter of this year includes a $30.9 million non-cash charge against earnings to correct an income tax valuation calculation error related to the company’s first-quarter results.
Revenue in the quarter fell 5 percent to $144.4 million, which Cars.com said mostly was driven by a pandemic-related drop in national advertising revenue and in its dealership customer count. Those declines were partly offset by revenue growth for its products compared with a year ago, the company said.
Cars.com said its adjusted earnings before interest, taxes, depreciation and amortization was $49 million, up 7 percent from the year-earlier quarter.
“Strong top-line trends, focused execution and thoughtful cost discipline drove year-over-year growth in adjusted EBITDA and free cash flow,” Cars.com CFO Sonia Jain said in a statement. “Increased investments in the business coupled with continued growth in digital solutions will position us to exit the year with a strengthened competitive and financial position.”
Cars.com shares fell 5 percent to $8.85 on Monday.
The pandemic took a toll on dealership vendors such as Cars.com, as auto retailers reduced marketing expenses such as subscriptions to vehicle shopping sites. Cars.com furloughed about 250 employees in April, and 170 jobs were permanently eliminated in May.
The company said Monday it had 18,130 dealership customers as of Sept. 30, down 505 from the same quarter in 2019. But Cars.com added 97 dealership customers between June 30 and Sept. 30, a slight rebound after losing 905 dealership customers between the first and second quarters because of the pandemic.
Revenue grew 42 percent from the second quarter, when Cars.com offered billing discounts to its listings customers. The company also said its monthly average revenue per dealership was $2,183 in the third quarter, which it said was a return to pre-pandemic levels and up from both the second quarter and the year-earlier quarter.
“Revenue rebounded sequentially with meaningful growth in [average revenue per dealer] and increased dealer customers as dealers are more rapidly adopting digital solutions in response to accelerated consumer demand because of the COVID pandemic,” Cars.com CEO Alex Vetter said in a statement.
Cars.com suspended its 2020 fiscal-year guidance in March amid uncertainty about the pandemic and its economic effects. The company did not provide updated figures Monday.