Cars.com Inc. (CARS) Business

Item 1. Business. Cars.com Inc. (NYSE:CARS) is a trusted audience-powered and data-driven technology platform that simplifies buying and selling cars. The flagship Cars.com marketplace connects millions of consumers to dealerships across the U.S., powering the car buying experience with artificial intelligence ("AI") shopping tools and comprehensive vehicle reviews and content. Our interconnected ecosystem of products enables dealers and OEMs to sell more cars by efficiently leveraging our marketplace, dealer websites, trade and appraisal tools and proprietary in-market media solutions. Learn more at www.carscommerce.inc.

Our premier automotive marketplace, Cars.com, empowers shoppers with the data, resources and digital tools they need to make informed buying decisions and seamlessly connect with automotive retailers. We also equip dealerships and OEMs with innovative solutions and data-driven intelligence to better reach and influence our 26 million average monthly shoppers. Not only does our marketplace drive ready-to-buy customers to the dealership, we believe our interconnected ecosystem of products also allows dealerships to operate more efficiently by facilitating a faster and easier car buying and selling experience.

The strength of our products and solutions has attracted approximately 19,500 franchise and independent dealer customers across the U.S. and Canada to our platform. Approximately 80% of our dealer customers subscribe to either the Cars.com marketplace or the marketplace and additional interconnected solutions, with our remaining customers subscribing to standalone digital website solutions. In addition, substantially all OEMs selling vehicles in the U.S. and Canada do business with us today.

For Consumers. Buying a car is one of life’s most significant and researched decisions. Consumers are challenged with makes, models and trim-levels, opaque, yet negotiable prices, and gaps in the online-to-offline shopping experience, all of which add complexity to an often overwhelming decision-making process. Shoppers desire a more streamlined, simplified and trustworthy automotive retail experience. We help car shoppers cut through the noise with AI-powered features designed to move them confidently from search to signature.

We believe our marketplace functions as a definitive resource for car shoppers. We are known for the depth and scale of our listings and reviews, as evidenced by our over 4.6 million monthly unique VINs and over 16 million consumer reviews as of December 31, 2025. In addition, our expert editorial content, including news and research publications, aid shoppers in their purchase journey. We also allow consumers to better understand cost of ownership from the convenience of their home with financing tools and vehicle trade-in values. Overall, our consumer experience is focused on reducing friction and improving speed to purchase through pricing, comparison shopping, research and communication tools that empower shoppers.

For Customers. Our platform provides local dealers, OEMs, dealer groups and auto-adjacent companies a variety of digital and media solutions to improve their marketing and operational efficiency. Dealers and OEMs particularly value our marketplace for the opportunity to connect with our in-market audience of 26 million average monthly users in 2025. We complement our marketplace products with digital solutions, including websites and trade and appraisal technology, in-market media solutions. For example, U.S. website customers that also have a marketplace subscription see approximately 45% more connections to their website, in addition to

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the associated marketplace leads they receive, as compared to those without marketplace. Importantly, we believe that many of the tools we have built for consumers, particularly those that support trade-in valuation, benefit our dealer customers and OEMs by enhancing consumer trust and reducing points of friction that can often arise in the purchase journey.

Industry Dynamics. As an audience-driven technology company, we are focused on helping our customers, primarily automotive dealerships, drive profitable vehicle sales. Consumer expectations on their digital purchase journey have only increased. As a result, some dealers seek to invest more in their websites and technology solutions to drive operational efficiency, while supporting shoppers in their preferred purchase channels (i.e., online, in person or both). We believe we are the first truly integrated marketplace-centric platform, providing a comprehensive suite of sales-oriented products and solutions that support dealers' local retail operations.

Products. Our interconnected product suite is organized around four core capabilities: Marketplace, Digital Experience, Media Solutions and Trade & Appraisal.

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Marketplace. Central to our platform is Cars.com, the most recognized automotive marketplace brand, which we believe serves a critical role as a trusted and neutral third-party marketplace connecting consumers, dealers and OEMs to drive automotive retail at scale. We enabled dealers and OEMs to professionally merchandise their inventory to our 26 million average monthly shoppers in 2025. Importantly, the majority of our traffic comes to us organically so that we provide our customers with a truly complementary and unduplicated audience. We offer dealers packages that include reputation management technology and digital financing tools, with additional functionality like media solutions, for our upper-tier packages. Notably, dealers purchasing these upper-tier packages typically experience a double-digit improvement in leads per listing. We continue to add new consumer features, such as CarsonTM, to our marketplace. CarsonTM , which launched in 2025, provides consumers with an AI-powered natural language search experience. Shoppers utilizing CarsonTM generate two times more leads than other shoppers.

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Digital Experience. We operate dealer websites in both the U.S. and Canada as an endorsed website provider by substantially all OEMs. These website hosting and related solutions transform automotive retail processes by making them faster, easier and smarter from search to signature. Built on a customizable platform and designed with user behavior data, we believe our websites are set apart by the advanced technologies that drive modern consumers toward purchase decisions. Today, we host the digital storefronts (websites) for approximately 7,700 dealers in the U.S. and Canada.

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Media Solutions. Our exclusive automotive media solutions enable local and national customers alike to reach proven in-market consumers. Whether on or off our Cars.com related properties, OEMs and dealers advertising with our media solutions experience increased consumer engagement as seen throughout the digital shopping experience. For example, when an OEM partner purchased a prominent advertising sponsorship in 2025, we observed increased consumer engagement on Cars.com (searches and vehicle page views), traffic to the OEM's dealers' websites, and a double-digit lift in conversions on those dealer websites during the sponsorship period. Our media solutions include:

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Cars Social. Cars Social enables dealers, OEMs and other national advertisers to target and serve native advertisements displaying real-time inventory to in-market car shoppers on Facebook, Instagram and other social media platforms by leveraging our valuable audience data.

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VIN Performance Media. VIN Performance Media utilizes advanced machine-learning to optimize all aspects of a media campaign, including audience targeting, real-time inventory and ad placement across search, social, and display.

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In-Market Video. In-Market Video provides OEMs and dealers with the opportunity to pinpoint serious, ready-to-buy shoppers geographically on their screen of choice via social media platforms, streaming apps and connected TV. This targeted approach drives high advertising efficiency for customers and compares favorably to the high-cost broadcast television solutions that dealers and OEMs have historically relied on.

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Trade & Appraisal. AccuTrade helps dealers manage inventory life-cycle from appraisal to exit to maximize dealer profitability. Gross profit begins at the time of appraisal by leveraging retail and wholesale demand data and diagnostic scans to determine the right trade-in offer for a VIN in minutes. Through this solution, dealers gain access to high quality used vehicle inventory and experience improved profitability by avoiding reconditioning costs of approximately $800 on average per vehicle acquisition. AccuTrade's rich dataset then determines the best retail or wholesale exit strategy for each vehicle. The dealer can choose to retail the vehicle on our Cars.com marketplace or wholesale their vehicle on DealerClub. And for dealers choosing to wholesale the vehicle, we have a click-to-list option to DealerClub, the first reputation-based, dealer-to-dealer digital auction that brings trust to wholesale auctions via transparent pricing and buyer and seller reviews.

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We believe this helps minimize arbitration disputes and title issues, ultimately improving overall profitability per wholesale transaction.

Our Strengths and Competitive Advantages. We are focused on simplifying car buying and selling by eliminating complexity and increasing transparency throughout the local retail experience, where sales and service are best facilitated. Our platform brings our industry leading marketplace together with innovative digital and media solutions which we believe creates frictionless shopping experiences for consumers and our customers. Led by our product first innovation strategy, industry-leading brand, high-quality audience and differentiated technology solutions, we are executing on our vision to be essential to the success of the automotive industry which we believe will drive accelerated growth in our subscription based revenue and cash flow.

A powerful suite of brands delivering integrated digital and media solutions that enable our platform strategy. Our suite of brands includes our flagship Cars.com integrated marketplace, digital retailing and media solutions that define our platform strategy and make us essential to the automotive industry. We believe our solutions seamlessly connect buyers and sellers wherever they are in their vehicle shopping journey. Our integrated platform helps sellers expand their consumer influence and engagement across the entire purchasing journey, ultimately increasing sales, creating operational efficiencies and improving profitability. For instance, dealers that subscribe to our trade and appraisal tools as well as our Cars.com marketplace have approximately 70% more marketplace leads, in addition to their Instant Offer leads.

A high-quality audience, at scale, enables our industry-leading platform. We have made strategic technology and marketing investments to deliver what we believe is the industry’s most qualified car shopping audience. Our audience powers our integrated platform strategy. Not only does our audience power our marketplace packages, they are also key to our ability to efficiently grow and scale our media solutions that allow customers to target in-market shoppers and strengthen our digital solutions.

In 2025, we had 26 million average monthly unique visitors that visited our marketplace a total of over 600 million times. Leveraging industry-leading brand recognition, we capture the majority of our traffic organically. Cars.com serves as a premier consumer resource, combining expert editorial content with easy-to-use tools such as Best Match™ and Carson™. Over the past 25 years, we have made more than half a billion connections between car shoppers and sellers.

According to a recent Cars.com survey, over 80% of our audience is in-market to buy a car, compared to a fraction of the general population. The average time for a shopper to purchase a car is approximately two months, and approximately 60% of the Cars.com audience plans to buy within the next two months.

Asset light business model with a diversified revenue base, attractive cash flow and strong balance sheet. We generate approximately 80% of our revenue via subscription-based solutions, creating a dependable recurring revenue stream across our diversified mix of marketplace subscription advertising packages, digital solutions, and media. Our customer concentration is also limited, as each month, we generate an average monthly revenue per dealer of over $2,400 during the fourth quarter from across our approximately 19,500 dealers.

Our asset light business model drives significant net operating cash flow, in excess of $135.0 million in each of the last three years, resulting in substantial liquidity and financial flexibility, which enables us to invest in innovation, pursue strategic growth opportunities and maintain a healthy balance sheet with modest leverage.

Competition. We compete with other companies to attract consumers and customers to our marketplace, digital experience, trade and appraisal, and media solutions. Our direct competitors are online automotive marketplaces, such as CarGurus, AutoTrader and TrueCar. We also compete with other automotive websites, such as CARFAX, Edmunds and Kelley Blue Book. We also compete with dealer software and marketing services providers such as Cox Automotive and DealerOn. Additionally, we compete for consumer audience with platforms, such as internet search engines, generative AI chat engines, online dealerships, social media marketplaces and online consumer marketplaces.

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Competition for Consumers. We compete for consumer visits with other online automotive marketplaces, OEM websites, free listing services, general search engines, generative AI chat engines, social media and dealer websites. We compete for shopper traffic primarily on the basis of the quality of our consumer experience. We believe our consumer experience compares favorably due to the scale of our vehicle listings, the content and unbiased transparency of the information we provide on vehicles, pricing and dealers, as well as the intuitive nature of our user interface, sophisticated search tools and algorithms and our mobile user experience, among other factors.

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Competition for Dealers. We compete for dealers’ marketing budget with offline customer acquisition channels, software and solutions spend, other online automotive marketplaces, dealers’ own customer acquisition efforts on search engines and

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other internet sites that attract consumers searching for vehicles. We compete primarily on the basis of the return on investment ("ROI") to the customer that our marketplace, solutions and data insights provide in the form of increased profitability and improved inventory turn time. We leverage our expansive, engaged audience and proprietary data to maintain a distinct competitive advantage. We believe by connecting well-informed consumers with dealers through these insights, we ensure a superior ROI that is both consistent and measurable.

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Competition for OEMs and other advertisers. We compete for a share of OEMs' and other advertisers total marketing budgets which include traditional media, such as television, radio, print media, and billboards, as well as digital media, such as media sites, other marketplaces, search engines and social media sites, among others. We compete for advertising spend based on the marketing ROI that our products provide. We believe we are in a favorable market position due to our large, in-market consumer audience, high consumer engagement and the effectiveness and relevance of our advertising products.

Intellectual Property. We take a strategic approach to intellectual property management by protecting our intellectual property and brands through a combination of trademarks, trade dress, domain names, copyrights, trade secrets and patents as appropriate. We have registered and unregistered U.S. and international trademarks, service marks, patents, domain names and copyrights. The duration of the protection afforded to our intellectual property depends on the type of property in question and the laws and regulations of the relevant jurisdiction. We protect our intellectual property rights by relying on federal, state and common law rights, including registration in the U.S. and applicable foreign jurisdictions. In addition, we seek to protect our proprietary information by entering into confidentiality and invention assignment agreements with our employees and confidentiality agreements with consultants, contractors and business partners. We also seek to control the use of our proprietary technology and intellectual property through provisions in both our general and product-specific terms of use on our mobile applications and websites.

Regulatory Matters. Various aspects of our business and the solutions we offer are or may be subject to an expanding and evolving range of local, state, federal and international regulations. The advertising and sale of new or used vehicles is highly regulated by the states in which we do business. Although we do not sell vehicles, the dealers from which we derive a significant portion of our revenue do and are subject to these regulations. Moreover, state regulatory authorities or other third parties could take and, on some occasions, have taken the position that some of the regulations applicable to dealers or to the manner in which vehicles are advertised and sold generally are directly applicable to our business model. Additionally, our business is directly subject to laws, regulations and standards regarding consumer communications, marketing and advertising activities conducted by telephone, email, mobile devices and the internet, such as the Telephone Consumer Protection Act, the CAN-SPAM Act and similar state consumer protection laws. Our digital solutions products may also be subject to laws and regulations governing accessibility, intellectual property ownership, obscenity, libel, privacy and AI among other issues.

In addition, we are subject to local, state and federal laws and regulations in the United States and internationally relating to privacy policies and obligations as well as our obligations regarding the personal information we collect, use, share, store and disclose. We strive to comply with industry standards and all applicable laws, regulations, policies, and legal obligations relating to privacy and data protection (including those imposed by comprehensive state consumer privacy laws, which are constantly evolving and increasing in number). We are also subject to our privacy policies and privacy-related obligations to third parties.

To operate in this highly regulated environment, we have developed our products and services with a view toward appropriately managing our regulatory risk compliance. If, and to the extent that, our products and services fail to satisfy relevant regulatory requirements, we could be subject to significant civil and criminal penalties, including fines, the award of significant damages in class action or other civil litigation, as well as orders that may interfere with our ability to provide our products and services in certain states.

Human Capital. The foundation of our business is our employees. As of December 31, 2025, we had approximately 1,700 full-time, part-time, seasonal and temporary employees. We are committed to the highest standards of integrity, inclusion and responsible business practices. Our commitment to build a culture and business that cares about our employees, customers, industry and communities is a part of who we are. Fundamental to these commitments are our company values:

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Rise Together - We put people at the center of what we do, from consumer to customer to community. We prioritize collaboration. When we work together, we win together.

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Care to Challenge - We innovate, we challenge convention and we get results because we care. It is what fuels our competitive spirit. We embrace creativity, buck tradition and grow beyond.

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Take Ownership - When there is an opportunity to make a positive impact, we go for it. We lean in and take risks. We think about tomorrow and act today.

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Do the Right Thing - Integrity is our foundation. We uphold our commitments; we lead by example. We do the right thing, every time. Especially when it is hard.

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Be Open to All - We encourage open-minded communication because we know diverse thinking yields better outcomes. We welcome new ideas, respect differences and open the floor to all voices.

We believe our highly innovative and collaborative teams are one of our biggest differentiators and the most important investment we can make. In order to attract and retain exceptional talent in pursuit of our mission to simplify everything about buying and selling cars, we offer competitive benefits, including market-competitive compensation, an Employee Stock Purchase Plan, a virtual first work environment, healthcare, paid time off, parental leave, adoption assistance, retirement benefits, tuition assistance, volunteer hours, employee skills development and leadership development.

We recognize the value of a workforce with varied backgrounds, opinions, perspectives and personal and professional experiences. As a result, we strive to foster a culture of inclusion that ensures our workplace appreciates the views and ideas of all. We also monitor employee satisfaction and engagement by conducting periodic surveys that are reviewed and, when appropriate, acted upon by our executive management team and shared with our Board of Directors. These surveys are an important way for us to identify areas where we can improve.

None of our employees are represented by a labor union or are subject to a collective bargaining agreement.

Available Information. Our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as well as proxy statements and amendments to those reports are available free of charge at https://investor.cars.com as soon as reasonably practicable after we file such material with, or furnish it to, the U.S. Securities and Exchange Commission ("SEC"). In addition, the SEC maintains a website (http://www.sec.gov) that contains information we electronically file with, or furnish to, the SEC. Information on our website is not part of this or any other report we file with, or furnish to, the SEC.