Dealership technology company Cars.com swung to a profit in the fourth quarter, citing tax benefits resulting from federal coronavirus relief legislation.
The Chicago company — which provides vehicle listings, dealership websites, marketing and other services — on Thursday reported net income of $7.2 million in the quarter that ended Dec. 31. That compared with a net loss of $4.1 million in the same quarter a year earlier. Cars.com said the quarterly profit was the result of tax benefits earned through increased ability to carryback operating losses under the federal Coronavirus Aid, Relief and Economic Security, or CARES, Act.
Adjusted net income in the fourth quarter plunged 86 percent to $6 million. The adjusted figure excludes one-time charges, such as amortization of intangible assets; stock-based compensation; severance, transformation and other exit costs; and transaction-related costs.
Fourth-quarter revenue was mostly flat at $153 million.
"We are entering 2021 in a position of operational and financial strength," Cars.com CEO Alex Vetter said in a statement. "While 2020 was a challenging year, the COVID-19 pandemic has accelerated the importance of our digital solutions strategy and propelled our organic strength as a technology enabler for both buyers and sellers."
For the full year 2020, Cars.com reported a net loss of $817.1 million, up from a net loss of $445.3 million in 2019. The company said the net loss last year was attributed to a noncash goodwill and intangible asset impairment pre-tax charge of $905.9 million prompted by the pandemic and taken in the first quarter of 2020.
Revenue fell 10 percent to $547.5 million last year, which the company attributed to billing discounts the company offered its vehicle-listings customers in the second quarter, a second-quarter drop in its dealership customer count and less national advertising revenue. Cars.com cut expenses last year during the pandemic, including by reducing staffing and marketing spending. The company permanently cut 170 jobs last year.
Cars.com's stock closed down 13 percent to $12.47 on Wall Street.
The company reported growth in the number of dealership customers in four of the last five quarters, with a dip in the second quarter when the pandemic resulted in state and local business restrictions to limit the spread of the COVID-19 illness, shutting showrooms in many states. Cars.com reported 18,372 dealership customers as of Dec. 31, down from 18,834 as of Dec. 31, 2019, but up from 18,130 as of Sept. 30, 2020.
Cars.com also said the number of dealership customers in its Dealer Inspire website business grew each quarter in 2020, reaching roughly 4,400 as of Dec. 31. The company also noted growth in its technology products, such as digital retailing, online chat and its Fuel in-market video tool.