Dealership technology company Cars.com said it plans to acquire automotive financial technology company CreditIQ in a $30 million deal.
Chicago-based Cars.com said Thursday it expects to complete the transaction this month. The acquisition will be funded with cash on hand, the company said, and includes the possibility for up to $50 million in additional performance-based cash consideration over three years.
The acquisition of CreditIQ will bring Cars.com into the auto finance market and expand the company's reach beyond its current dealership advertising and technology markets, Cars.com CEO Alex Vetter said in the statement.
"The acquisition of this scalable technology supports our vision of creating frictionless omnichannel experiences and further growing our platform capabilities for buyers and sellers," Vetter said.
CreditIQ, founded in 2014, offers technology for digital retailing and financing, including online credit and loan approvals. The combination of Cars.com and CreditIQ will allow dealerships to use CreditIQ's platform with existing Cars.com products, including dealership websites, its Online Shopper digital retailing tool and its vehicle listings marketplace once it is integrated, as soon as the first quarter of 2022, Cars.com said.
"CreditIQ's technology was created to help dealers be more efficient and profitable," CreditIQ CEO Bill Liatsis said in a statement.
Also Thursday, Cars.com reported higher revenue in the third quarter that ended Sept. 30 and swung to a net profit following a net loss in the same quarter a year earlier.
The company had 19,029 dealership customers as of Sept. 30, an increase of 899 from Sept. 30, 2020, and an increase of 184 from June 30. Monthly average revenue per dealership rose 6.8 percent to $2,332, which Vetter said is attributed to higher adoption of its digital products and dealership customer growth and retention.
Cars.com said it increased its operating expenses in the third quarter compared with the same period in 2020, during which the company pulled back on some spending because of the pandemic. Cars.com said Thursday that the increases reflect more-typical spending levels and included higher marketing, product and technology, and compensation expenses.
Cars.com shares rose 1 percent to $13.42 in morning trading.
Q3 revenue: $156.6 million, up 8.4% from a year earlier
Q3 net income: $2.4 million, compared with a net loss of $12.3 million a year earlier
Q3 adjusted EBITDA: $45.8 million, down 6.6% from a year earlier
Guidance: Fourth-quarter revenue, $157.5 million to $159.5 million
