Dealership technology company Cars.com posted a smaller profit in the first quarter than a year earlier on slightly higher revenue.
Chicago-based Cars.com on Thursday reported net income of $4.3 million in the quarter ended March 31, down 18 percent from the same period a year earlier. Revenue was up 3 percent to $158.2 million, with growth in revenue from its dealership customers and driven by its digital software products, the company said.
Revenue from automakers, including for advertising, was down 16 percent compared with the first quarter of 2021, which Cars.com said is related to the ongoing microchip and new-vehicle inventory shortage.
The company reported higher operating expenses in the first quarter, citing increased marketing spending and the resumption of in-person industry events after the pandemic halted many of them. Cars.com also said product and technology spending was up, in part connected to the integration of automotive financial technology company CreditIQ, which Cars.com acquired in November, and Accu-Trade, a provider of vehicle appraisal and valuation data and logistics technology, acquired in March.
Accu-Trade is being piloted in certain markets and will be expanded during the second quarter, CEO Alex Vetter told analysts Thursday on the company's first-quarter earnings call.
"Our momentum continues, driven by robust dealer customer growth, ongoing product adoption and record retention, resulting in continued revenue growth in the first quarter," Vetter said.
Growth in the company's average revenue per dealer "reflects the ongoing success of our core marketplace, website solutions and our targeted advertising solution Fuel, despite the impacts of inventory shortages," he said.
Cars.com reported 19,500 dealership customers as of March 31 — the highest dealership count in more than three years, Vetter said. That tally is up 677 from the same quarter a year ago and up 321 since Dec. 31.
Q1 revenue: $158.2 million, up 3% from a year earlier
Q1 net income: $4.3 million, down 18% from a year earlier
Q1 adjusted EBITDA: $42 million, down 13% from a year earlier
Guidance: Second-quarter revenue ranging from $161 million to $163 million; full-year revenue growth of 6% to 8%