Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | Apr. 29, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2021 | |
Document Fiscal Year Focus | 2021 | |
Trading Symbol | CARS | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | Cars.com Inc. | |
Entity Central Index Key | 0001683606 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity File Number | 001-37869 | |
Entity Tax Identification Number | 81-3693660 | |
Entity Address, Address Line One | 300 S. Riverside Plaza | |
Entity Address, Address Line Two | Suite 1000 | |
Entity Address, City or Town | Chicago | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60606 | |
City Area Code | 312 | |
Local Phone Number | 601-5000 | |
Entity Interactive Data Current | Yes | |
Title of 12(b) Security | Common Stock | |
Security Exchange Name | NYSE | |
Entity Incorporation, State or Country Code | DE | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Common Stock Shares Outstanding | 68,643,592 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 53,724 | $ 67,719 |
Accounts receivable, net | 93,238 | 93,649 |
Prepaid expenses | 9,952 | 6,491 |
Other current assets | 1,324 | 10,222 |
Total current assets | 158,238 | 178,081 |
Property and equipment, net | 43,479 | 41,323 |
Intangible assets, net | 813,507 | 835,166 |
Investments and other assets, net | 20,582 | 21,142 |
Total assets | 1,035,806 | 1,075,712 |
Current liabilities: | ||
Accounts payable | 22,891 | 16,512 |
Accrued compensation | 9,178 | 18,319 |
Current portion of long-term debt | 7,733 | 7,756 |
Other accrued liabilities | 58,620 | 47,781 |
Total current liabilities | 98,422 | 90,368 |
Noncurrent liabilities: | ||
Long-term debt | 524,260 | 576,143 |
Deferred tax liability | 30,791 | 30,800 |
Other noncurrent liabilities | 36,331 | 38,225 |
Total noncurrent liabilities | 591,382 | 645,168 |
Total liabilities | 689,804 | 735,536 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred Stock at par, $0.01 par value; 5,000 shares authorized; no shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively | ||
Common Stock at par, $0.01 par value; 300,000 shares authorized; 68,531 and 67,387 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively | 685 | 674 |
Additional paid-in capital | 1,529,830 | 1,530,493 |
Accumulated deficit | (1,178,909) | (1,184,187) |
Accumulated other comprehensive loss | (5,604) | (6,804) |
Total stockholders' equity | 346,002 | 340,176 |
Total liabilities and stockholders' equity | $ 1,035,806 | $ 1,075,712 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2021 | Dec. 31, 2020 |
Statement Of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 68,531,000 | 67,387,000 |
Common stock, shares outstanding | 68,531,000 | 67,387,000 |
Consolidated Statements of Inco
Consolidated Statements of Income (Loss) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenue: | ||
Total revenue | $ 153,295 | $ 148,094 |
Operating expenses: | ||
Cost of revenue and operations | 27,831 | 26,030 |
Product and technology | 16,760 | 14,873 |
Marketing and sales | 53,211 | 54,922 |
General and administrative | 13,266 | 14,117 |
Affiliate revenue share | 0 | 6,369 |
Depreciation and amortization | 25,680 | 30,961 |
Goodwill and intangible asset impairment | 0 | 905,885 |
Total operating expenses | 136,748 | 1,053,157 |
Operating income (loss) | 16,547 | (905,063) |
Nonoperating expense: | ||
Interest expense, net | (10,001) | (7,526) |
Other income (expense), net | 38 | (9,501) |
Total nonoperating expense, net | (9,963) | (17,027) |
Income (loss) before income taxes | 6,584 | (922,090) |
Income tax expense (benefit) | 1,306 | (134,656) |
Net income (loss) | $ 5,278 | $ (787,434) |
Weighted-average common shares outstanding: | ||
Basic | 67,787 | 66,938 |
Diluted | 70,254 | 66,938 |
Earnings (loss) per share: | ||
Basic | $ 0.08 | $ (11.76) |
Diluted | $ 0.08 | $ (11.76) |
Dealer | ||
Revenue: | ||
Total revenue | $ 132,958 | $ 125,361 |
OEM and National | ||
Revenue: | ||
Total revenue | 18,069 | 19,393 |
Other | ||
Revenue: | ||
Total revenue | $ 2,268 | $ 3,340 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Statement Of Income And Comprehensive Income [Abstract] | ||
Net income (loss) | $ 5,278 | $ (787,434) |
Other comprehensive income (loss), net of tax: | ||
Interest rate swap | 0 | (7,761) |
Reclassification of amortization of accumulated other comprehensive income (loss) on interest rate swap into net income (loss) | 1,200 | 950 |
Total other comprehensive income (loss) | 1,200 | (6,811) |
Comprehensive income (loss) | $ 6,478 | $ (794,245) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Preferred Stock | Common Stock | Additional Paid-In Capital | (Accumulated Deficit) Retained Earnings | Accumulated Other Comprehensive Loss |
Balance at Dec. 31, 2019 | $ 1,141,068 | $ 0 | $ 668 | $ 1,515,109 | $ (367,067) | $ (7,642) |
Balance, Shares at Dec. 31, 2019 | 0 | 66,764 | ||||
Net income (loss) | (787,434) | $ 0 | $ 0 | 0 | (787,434) | 0 |
Other comprehensive income, net of tax | (6,811) | 0 | 0 | 0 | 0 | (6,811) |
Shares issued in connection with stock-based compensation plans, net | (904) | 0 | $ 2 | (906) | 0 | 0 |
Shares issued in connection with stock-based compensation plans, net, Shares | 197 | |||||
Stock-based compensation | 1,971 | 0 | $ 0 | 1,971 | 0 | 0 |
Balance at Mar. 31, 2020 | 347,890 | $ 0 | $ 670 | 1,516,174 | (1,154,501) | (14,453) |
Balance, Shares at Mar. 31, 2020 | 0 | 66,961 | ||||
Balance at Dec. 31, 2020 | $ 340,176 | $ 0 | $ 674 | 1,530,493 | (1,184,187) | (6,804) |
Balance, Shares at Dec. 31, 2020 | 67,387 | 0 | 67,387 | |||
Net income (loss) | $ 5,278 | $ 0 | $ 0 | 0 | 5,278 | 0 |
Other comprehensive income, net of tax | 1,200 | 0 | 0 | 0 | 0 | 1,200 |
Shares issued in connection with stock-based compensation plans, net | (5,630) | 0 | $ 11 | (5,641) | 0 | 0 |
Shares issued in connection with stock-based compensation plans, net, Shares | 1,144 | |||||
Stock-based compensation | 4,978 | 0 | $ 0 | 4,978 | 0 | 0 |
Balance at Mar. 31, 2021 | $ 346,002 | $ 0 | $ 685 | $ 1,529,830 | $ (1,178,909) | $ (5,604) |
Balance, Shares at Mar. 31, 2021 | 68,531 | 0 | 68,531 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 5,278 | $ (787,434) |
Adjustments to reconcile Net income (loss) to Net cash provided by operating activities: | ||
Depreciation | 4,021 | 5,683 |
Amortization of intangible assets | 21,659 | 25,278 |
Goodwill and intangible asset impairment | 0 | 905,885 |
Impairment of non-marketable security | 0 | 9,447 |
Amortization of accumulated other comprehensive income on interest rate swap | 1,417 | 0 |
Stock-based compensation | 4,978 | 1,971 |
Deferred income taxes | (226) | (133,064) |
Provision for doubtful accounts | 129 | 1,606 |
Amortization of debt issuance costs | 834 | 556 |
Other, net | (34) | 75 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 282 | 5,087 |
Prepaid expenses | (3,461) | (1,566) |
Other current assets | 8,915 | (218) |
Other assets | 328 | 458 |
Accounts payable | 6,438 | 5,133 |
Accrued compensation | (9,141) | (7,682) |
Other accrued liabilities | 10,839 | (1,661) |
Other noncurrent liabilities | (1,894) | (662) |
Net cash provided by operating activities | 50,362 | 28,892 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (6,219) | (5,755) |
Net cash used in investing activities | (6,219) | (5,755) |
Cash flows from financing activities: | ||
Proceeds from revolving loan borrowings | 0 | 165,000 |
Payments of long-term debt | (52,500) | (13,438) |
Stock-based compensation plans, net | (5,630) | (904) |
Payments of debt issuance costs and other fees | (8) | 0 |
Net cash (used in) provided by financing activities | (58,138) | 150,658 |
Net (decrease) increase in cash and cash equivalents | (13,995) | 173,795 |
Cash and cash equivalents at beginning of period | 67,719 | 13,549 |
Cash and cash equivalents at end of period | 53,724 | 187,344 |
Supplemental cash flow information: | ||
Cash (received) paid for income taxes, net of refunds | (9,045) | 124 |
Cash paid for interest and interest rate swap | $ 3,503 | $ 6,956 |
Description of Business, Compan
Description of Business, Company History and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Description of Business, Company History and Summary of Significant Accounting Policies | NOTE 1. Description of Business, Company History and Summary of Significant Accounting Policies Description of Business. Cars.com Inc. (the “Company” or “CARS”) is a leading digital marketplace and solutions provider for the automotive industry, connecting car shoppers with sellers. Through the marketplace, dealer websites and other digital products, the Company showcases dealer inventory, elevates and amplifies dealers’ and automotive manufacturers’ (“OEMs”) brands, connects sellers with the Company’s ready-to-buy audience and empowers shoppers with the resources and information needed to make confident car buying decisions. The Company’s digital solutions strategy builds on the rich data and audience of its digital marketplace to offer media and solutions that drive growth and efficiency for the automotive industry. The Company’s portfolio of brands now includes Cars.com, Dealer Inspire, FUEL, DealerRater, Auto.com, PickupTrucks.com and NewCars.com. Basis of Presentation . These accompanying unaudited interim Consolidated Financial Statements (“Consolidated Financial Statements”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial statements. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. These Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the notes thereto for the year ended December 31, 2020, which are included in the Company's Annual Report on Form 10-K dated February 25, 2021 (the “December 31, 2020 Financial Statements”). The significant accounting policies used in preparing these Consolidated Financial Statements were applied on a basis consistent with those reflected in the December 31, 2020 Financial Statements. In the opinion of management, the Consolidated Financial Statements contain all adjustments (consisting of a normal, recurring nature) necessary to present fairly the Company's financial position, results of operations, cash flows and changes in stockholders' equity as of the dates and for the periods indicated. The unaudited results of operations for the three months ended March 31, 2021 are not necessarily indicative of results that may be expected for the year ending December 31, 2021. Use of Estimates. The preparation of the accompanying Consolidated Financial Statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect amounts reported in the Consolidated Financial Statements and accompanying disclosures. Although these estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future, actual results may differ from those estimates. Reclassifications . Certain prior year balances have been reclassified to conform to the current year presentation. In addition, effective January 1, 2021, the Company renamed its revenue categories as follows: "Direct" revenue is now "Dealer" revenue and "National advertising" revenue is now "OEM and National" revenue. This naming convention change has no impact on the components or the historical amounts of the respective revenue categories. Dealer revenue consists of marketplace and digital solutions sold to dealer customers. OEM and National revenue consists of display advertising and other solutions sold to OEMs, advertising agencies, automotive dealer associations and auto adjacent businesses. Principles of Consolidation . The accompanying Consolidated Financial Statements include the accounts of Cars.com Inc. and its 100% owned subsidiaries. All intercompany transactions and accounts are eliminated in consolidation. |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2021 | |
Revenue From Contract With Customer [Abstract] | |
Revenue | NOTE 2. Revenue Revenue Summary . In the table below (in thousands), revenue is disaggregated by major products and services. The Company only has one reportable segment; therefore, further disaggregation is not applicable at this time. Three Months Ended March 31, Major products and services 2021 2020 Subscription advertising and digital solutions $ 125,446 $ 117,263 Display advertising 21,957 23,359 Pay per lead 3,760 5,743 Other 2,132 1,729 Total revenue $ 153,295 $ 148,094 |
Goodwill and Indefinite-lived I
Goodwill and Indefinite-lived Intangible Asset | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Indefinite-lived Intangible Asset | NOTE 3. Goodwill and Indefinite-lived Intangible Asset In March 2020, the Company determined there was a triggering event, caused by the economic impacts of the novel coronavirus disease 2019 (“COVID-19”) pandemic and related restrictions. The Company performed interim quantitative impairment tests as of March 31, 2020. The results of the goodwill and indefinite-lived intangible asset impairment tests indicated at the time, due to the projected impacts of COVID-19, that the carrying values exceeded the estimated fair values and thus, the Company recorded an impairment of $505.9 million and $400.0 million related to its goodwill and indefinite-lived intangible asset, respectively. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Debt | NOTE 4. Debt As of March 31, 2021, the Company was in compliance with the covenants under its debt agreements. Term Loan. As of March 31, 2021, the outstanding principal amount under the Term Loan was $145.0 million and the interest rate in effect was 2.8%, not including the impact of the interest rate swap . During the three months ended March 31, 2021, the Company made $52.5 million in Term Loan payments, of which $50.0 million were voluntary. Revolving Loan. As of March 31, 2021, $230.0 million was available to borrow under the Revolving Loan. The Company had zero drawdowns on the Revolving Loan during the three months ended March 31, 2021. Senior Unsecured Notes. In October 2020, the Company issued $400.0 million aggregate principal amount of 6.375% senior unsecured notes due 2028. Interest on the notes is due semi-annually on May 1 and November 1. Fair Value. The Company's debt is classified as Level 2 in the fair value hierarchy and the fair value is measured based on comparable trading prices, ratings, sectors, coupons and maturities of similar instruments. As of March 31, 2021, the fair value of the outstanding indebtedness was approximately $560.6 million, compared to the carrying value of $545.0 million. As of December 31, 2020, the fair value approximated the carrying value. |
Interest Rate Swap
Interest Rate Swap | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Interest Rate Swap | NOTE 5. Interest Rate Swap The interest rate on borrowings under the Company’s Term Loan is floating and, therefore, subject to fluctuations. In order to manage the risk associated with changes in interest rates on its borrowing under the Term Loan, the Company entered into an interest rate swap (the “Swap”) effective December 31, 2018. Under the terms of the Swap, the Company is locked into a fixed rate of interest of 2.96% plus an applicable margin, as defined in the Company’s Credit Agreement, on a notional amount of $300 million. The Swap was initially designated as a cash flow hedge of interest rate risk. During the second quarter of 2020, the Company entered into the second amendment to the Credit Agreement, which triggered a quantitative hedge effectiveness test that resulted in the loss of hedge accounting. As a result, as of the date of the second amendment, the unrealized loss included within Accumulated other comprehensive loss was frozen and is now being ratably reclassified into Net income (loss) over the remaining life of the Swap through Interest expense, net and Income tax expense (benefit) within the Consolidated Statements of Income (Loss). Subsequent to the second amendment, any changes in the fair value of the Swap are recorded within Other income (expense), net on the Consolidated Statements of Income (Loss). During the fourth quarter of 2020, the Company entered into the third amendment to the Credit Agreement, which triggered a partial debt extinguishment, including a partial extinguishment of the underlying Term Loan. Due to the reduction in the Term Loan as compared to the notional amount of the Swap, the Company wrote-off a proportional amount of the frozen Accumulated other comprehensive loss balance as of the date of the partial extinguishment proportional to the reduction in the underlying notional amount of Term Loan. The Company will continue to amortize the remaining Accumulated other comprehensive loss to Interest expense, net and Income tax expense (benefit) within the Consolidated Statements of Income (Loss) through the remainder of the term of the Swap. Any changes in the fair value of the Swap will continue to be recorded within Other income (expense), net on the Consolidated Statements of Income (Loss). As of March 31, 2021, the fair value of the Swap was an unrealized loss of $10.0 million, of which $8.6 million and $1.4 million is recorded in Other accrued liabilities and Other noncurrent liabilities, respectively, on the Consolidated Balance Sheets. As of December 31, 2020, the fair value of the Swap was an unrealized loss of $12.1 million, of which $8.5 million and $3.6 million is recorded in Other accrued liabilities and Other noncurrent liabilities, respectively, on the Consolidated Balance Sheets. During the three months ended March 31, 2021 and 2020, $1.4 million and $1.0 million was reclassified from Accumulated other comprehensive loss and recorded in Interest expense, net, respectively. During the three months ended March 31, 202 1 , the Company made payments of $ million related to the Swap and $ million was reclassified as a tax benefit from Accumulated other comprehensive loss into Income tax expense (benefit) on the Consolidated Statements of Income (Loss). |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 6. Commitments and Contingencies The Company and its subsidiaries are parties from time to time in legal and administrative proceedings involving matters incidental to its business. These matters, whether pending, threatened or unasserted, if decided adversely to the Company or settled, may result in liabilities material to its financial position, results of operations or cash flows. The Company records a liability when it believes that it is both probable that a loss will be incurred and the amount of loss can be reasonably estimated. The Company evaluates, at least quarterly, developments in its legal matters that could affect the amount of liability that has been previously accrued and makes adjustments as appropriate. Significant judgment is required to determine both the probability and the estimated amount. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2021 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation | NOTE 7. Stock-Based Compensation Restricted Stock Units (“RSUs”) and Restricted Stock. RSUs represent the right to receive unrestricted shares of the Company’s common stock at the time of vesting, subject to any restrictions as specified in the individual holder’s award agreement. RSUs are subject to graded vesting, generally ranging between one and four years and the fair value of RSUs is equal to the Company’s common stock price on the date of grant. Restricted Stock represents RSUs that have been delivered to certain non-employee directors who have elected to receive shares underlying RSUs before they vest. Restricted Stock is subject to vesting over one year and the fair value of the Restricted Stock is equal to the Company’s common stock price on the date of grant. RSU and Restricted Stock activity for the three months ended March 31, 2021 is as follows (in thousands, except for weighted-average grant date fair value): Number of RSUs and Restricted Stock Weighted-Average Grant Date Fair Value Outstanding as of December 31, 2020 4,061 $ 8.31 Granted 1,351 15.17 Vested and delivered (1,171 ) 8.20 Forfeited (37 ) 8.54 Outstanding as of March 31, 2021 (1)(2) 4,204 10.54 (1) Included in “Outstanding as of March 31, 2021” are 108 shares of Restricted Stock that were delivered, but not yet vested (2) Included in “Outstanding as of March 31, 2021” are 91 RSUs that were vested, but not yet delivered Performance Stock Units (“PSUs”). PSUs represent the right to receive unrestricted shares of the Company’s common stock at the time of vesting. The fair value of the PSUs is equal to the Company’s common stock price on the date of grant. Expense related to PSUs is recognized when the performance conditions are probable of being achieved. The percentage of PSUs that may vest ranges from 0% to 200% of the number of PSUs granted based on the Company’s future performance related to certain revenue targets and adjusted earnings before interest, income taxes, depreciation and amortization targets over a three-year Number of PSUs Weighted-Average Grant Date Fair Value Outstanding as of December 31, 2020 730 $ 9.28 Granted — — Vested and delivered (588 ) 5.74 Forfeited — — Outstanding as of March 31, 2021 142 23.98 Stock Options. Stock options represent the right to purchase shares of the Company’s common stock at the time of vesting, subject to any restrictions as specified in the individual holder’s award agreement. Stock options are subject to three-year Number of Options Weighted-Average Grant Date Fair Value Weighted-Average Remaining Contractual Term (in years) Aggregate Intrinsic Value Outstanding as of December 31, 2020 513 $ 2.80 9.22 $ 3,028 Granted 291 9.63 — — Exercised — — — — Forfeited — — — — Outstanding as of March 31, 2021 804 5.27 9.33 3,880 Exercisable as of March 31, 2021 — — — — The fair value of the stock options granted during the three months ended March 31, 2021 and 2020 are estimated on the grant date using the Black-Scholes option pricing model, using the following assumptions: 2021 2020 Risk-free interest rate 1.15 % 1.01 % Weighted-average volatility 69.00 % 53.08 % Dividend yield 0 % 0 % Expected years until exercise 6.5 6.5 |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | NOTE 8. Earnings (Loss) Per Share Basic earnings (loss) per share is calculated by dividing Net income (loss) by the weighted-average number of shares of common stock outstanding. Diluted earnings (loss) per share is similarly calculated, except that the calculation includes the dilutive effect of the assumed issuance of shares under stock-based compensation plans, unless the inclusion of such shares would have an anti-dilutive effect. The computation of Earnings (loss) per share is as follows (in thousands, except per share data): Three Months Ended March 31, 2021 2020 Net income (loss) $ 5,278 $ (787,434 ) Basic weighted-average common shares outstanding 67,787 66,938 Effect of dilutive stock-based compensation awards (1) 2,467 — Diluted weighted-average common shares outstanding 70,254 66,938 Earnings (loss) per share, basic $ 0.08 $ (11.76 ) Earnings (loss) per share, diluted 0.08 (11.76 ) (1) There were 1,815 and 4,516 potential common shares excluded from diluted weighted-average common shares outstanding for the three months ended March 31, 2021 and 2020, respectively, as their inclusion would have an anti-dilutive effect. |
Other Income (Expense), net
Other Income (Expense), net | 3 Months Ended |
Mar. 31, 2021 | |
Other Income And Expenses [Abstract] | |
Other Income (Expense), net | NOTE 9. Other Income (Expense), net Included in Other income (expense), net in the three months ended March 31, 2020 was a full impairment of $9.4 million of a non-marketable investment, triggered by the COVID-19 pandemic and related restrictions. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 10. Income Taxes Deferred Tax Asset and Valuation Allowance. As a result of the goodwill and indefinite-lived intangible asset impairments recorded during the three months ended March 31, 2020, the Company has recorded a full valuation allowance against its deferred tax assets as of March 31, 2021, which represents the balance of deferred tax assets that the Company has concluded that it is not more likely than not to realize. In reaching this conclusion, in accordance with U.S. GAAP, the Company has evaluated all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized in future periods. As of March 31, 2021, the Company determined, based upon the evaluation of all available evidence, that there was sufficient significant negative evidence presented by the Company’s history of recent losses to conclude it was more likely than not that its deferred tax assets would not be realized. Therefore, the Company has recorded a full valuation allowance against its deferred tax assets. At each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. Effective Tax Rate. The effective income tax rate, expressed by calculating the income tax expense as a percentage of Income before income tax, was 19.8% for the three months ended March 31, 2021, which varied from the statutory federal income tax rate of 21%, primarily due to the tax benefit realized on stock-based compensation, offset in part by the full valuation allowance on the Company’s net deferred tax asset position recorded during the three months ended March 31, 2021. The effective income tax rate was 14.6% for the three months ended March 31, 2020. The effective tax rate differed from the statutory federal income tax rate of 21%, primarily due to the tax impact of the goodwill and intangible asset impairments and the valuation allowance recorded during the three months ended March 31, 2020. (In thousands, except percentages) Three Months Ended March 31, 2021 Income tax provision at statutory rate $ 1,383 21.0 % State income taxes, net of federal income tax benefit 236 3.6 Stock-based compensation (2,679 ) (40.7 ) Uncertain tax positions 870 13.2 Valuation allowance 1,802 27.3 Other, net (306 ) (4.6 ) Income tax expense $ 1,306 19.8 % |
Description of Business, Comp_2
Description of Business, Company History and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation . These accompanying unaudited interim Consolidated Financial Statements (“Consolidated Financial Statements”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial statements. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. These Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the notes thereto for the year ended December 31, 2020, which are included in the Company's Annual Report on Form 10-K dated February 25, 2021 (the “December 31, 2020 Financial Statements”). The significant accounting policies used in preparing these Consolidated Financial Statements were applied on a basis consistent with those reflected in the December 31, 2020 Financial Statements. In the opinion of management, the Consolidated Financial Statements contain all adjustments (consisting of a normal, recurring nature) necessary to present fairly the Company's financial position, results of operations, cash flows and changes in stockholders' equity as of the dates and for the periods indicated. The unaudited results of operations for the three months ended March 31, 2021 are not necessarily indicative of results that may be expected for the year ending December 31, 2021. |
Use of Estimates | Use of Estimates. The preparation of the accompanying Consolidated Financial Statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect amounts reported in the Consolidated Financial Statements and accompanying disclosures. Although these estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future, actual results may differ from those estimates. Reclassifications . Certain prior year balances have been reclassified to conform to the current year presentation. In addition, effective January 1, 2021, the Company renamed its revenue categories as follows: "Direct" revenue is now "Dealer" revenue and "National advertising" revenue is now "OEM and National" revenue. This naming convention change has no impact on the components or the historical amounts of the respective revenue categories. Dealer revenue consists of marketplace and digital solutions sold to dealer customers. OEM and National revenue consists of display advertising and other solutions sold to OEMs, advertising agencies, automotive dealer associations and auto adjacent businesses. |
Reclassification | Reclassifications . Certain prior year balances have been reclassified to conform to the current year presentation. In addition, effective January 1, 2021, the Company renamed its revenue categories as follows: "Direct" revenue is now "Dealer" revenue and "National advertising" revenue is now "OEM and National" revenue. This naming convention change has no impact on the components or the historical amounts of the respective revenue categories. Dealer revenue consists of marketplace and digital solutions sold to dealer customers. OEM and National revenue consists of display advertising and other solutions sold to OEMs, advertising agencies, automotive dealer associations and auto adjacent businesses. |
Principles of Consolidation | Principles of Consolidation . The accompanying Consolidated Financial Statements include the accounts of Cars.com Inc. and its 100% owned subsidiaries. All intercompany transactions and accounts are eliminated in consolidation. |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Revenue From Contract With Customer [Abstract] | |
Schedule of Revenue Disaggregated by Sales Channel and Major Products and Services | Three Months Ended March 31, Major products and services 2021 2020 Subscription advertising and digital solutions $ 125,446 $ 117,263 Display advertising 21,957 23,359 Pay per lead 3,760 5,743 Other 2,132 1,729 Total revenue $ 153,295 $ 148,094 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of RSU Activity | Number of RSUs and Restricted Stock Weighted-Average Grant Date Fair Value Outstanding as of December 31, 2020 4,061 $ 8.31 Granted 1,351 15.17 Vested and delivered (1,171 ) 8.20 Forfeited (37 ) 8.54 Outstanding as of March 31, 2021 (1)(2) 4,204 10.54 (1) Included in “Outstanding as of March 31, 2021” are 108 shares of Restricted Stock that were delivered, but not yet vested (2) Included in “Outstanding as of March 31, 2021” are 91 RSUs that were vested, but not yet delivered |
Summary of PSU Activity | PSU activity for the three months ended March 31, 2021 is as follows (in thousands, except for weighted-average grant date fair value): Number of PSUs Weighted-Average Grant Date Fair Value Outstanding as of December 31, 2020 730 $ 9.28 Granted — — Vested and delivered (588 ) 5.74 Forfeited — — Outstanding as of March 31, 2021 142 23.98 |
Summary of Stock Option Activity | Stock option activity for the three months ended March 31, 2021 is as follows (in thousands, except for weighted-average grant date fair value and weighted-average remaining contractual term): Number of Options Weighted-Average Grant Date Fair Value Weighted-Average Remaining Contractual Term (in years) Aggregate Intrinsic Value Outstanding as of December 31, 2020 513 $ 2.80 9.22 $ 3,028 Granted 291 9.63 — — Exercised — — — — Forfeited — — — — Outstanding as of March 31, 2021 804 5.27 9.33 3,880 Exercisable as of March 31, 2021 — — — — |
Summary of Fair Value of Stock Options Granted are Estimated Using Black Scholes Option Pricing Model | The fair value of the stock options granted during the three months ended March 31, 2021 and 2020 are estimated on the grant date using the Black-Scholes option pricing model, using the following assumptions: 2021 2020 Risk-free interest rate 1.15 % 1.01 % Weighted-average volatility 69.00 % 53.08 % Dividend yield 0 % 0 % Expected years until exercise 6.5 6.5 |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Computation of Earnings (Loss) Per Share | The computation of Earnings (loss) per share is as follows (in thousands, except per share data): Three Months Ended March 31, 2021 2020 Net income (loss) $ 5,278 $ (787,434 ) Basic weighted-average common shares outstanding 67,787 66,938 Effect of dilutive stock-based compensation awards (1) 2,467 — Diluted weighted-average common shares outstanding 70,254 66,938 Earnings (loss) per share, basic $ 0.08 $ (11.76 ) Earnings (loss) per share, diluted 0.08 (11.76 ) (1) There were 1,815 and 4,516 potential common shares excluded from diluted weighted-average common shares outstanding for the three months ended March 31, 2021 and 2020, respectively, as their inclusion would have an anti-dilutive effect. |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate Varied from Statutory Federal Income Tax Rate | (In thousands, except percentages) Three Months Ended March 31, 2021 Income tax provision at statutory rate $ 1,383 21.0 % State income taxes, net of federal income tax benefit 236 3.6 Stock-based compensation (2,679 ) (40.7 ) Uncertain tax positions 870 13.2 Valuation allowance 1,802 27.3 Other, net (306 ) (4.6 ) Income tax expense $ 1,306 19.8 % |
Description of Business, Comp_3
Description of Business, Company History and Summary of Significant Accounting Policies - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Percentage of ownership by the company | 100.00% |
Revenue - Additional Informatio
Revenue - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2021Segment | |
Revenue From Contract With Customer [Abstract] | |
Number of reportable segment | 1 |
Revenue - Summary of Revenue Di
Revenue - Summary of Revenue Disaggregated by Sales Channel and Major Products and Services (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Disaggregation Of Revenue [Line Items] | ||
Total revenue | $ 153,295 | $ 148,094 |
Subscription Advertising and Digital Solutions | ||
Disaggregation Of Revenue [Line Items] | ||
Total revenue | 125,446 | 117,263 |
Display Advertising | ||
Disaggregation Of Revenue [Line Items] | ||
Total revenue | 21,957 | 23,359 |
Pay Per Lead | ||
Disaggregation Of Revenue [Line Items] | ||
Total revenue | 3,760 | 5,743 |
Other | ||
Disaggregation Of Revenue [Line Items] | ||
Total revenue | $ 2,132 | $ 1,729 |
Goodwill and Indefinite-lived_2
Goodwill and Indefinite-lived Intangible Asset - Additional Information (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill, impairment | $ 505.9 |
Indefinite-lived intangibles asset, impairment | $ 400 |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) $ in Thousands | Oct. 30, 2020 | Mar. 31, 2021 | Dec. 31, 2020 |
Line Of Credit Facility [Line Items] | |||
Outstanding indebtedness, carrying value | $ 524,260 | $ 576,143 | |
Level 2 | |||
Line Of Credit Facility [Line Items] | |||
Outstanding indebtedness, fair value | 560,600 | ||
Outstanding indebtedness, carrying value | 545,000 | ||
6.375% Senior Unsecured Notes Due 2028 | |||
Line Of Credit Facility [Line Items] | |||
Proceeds from issuance initial public offering | $ 400,000 | ||
Term Loan | |||
Line Of Credit Facility [Line Items] | |||
Outstanding principal amount | $ 145,000 | ||
Effective interest rate | 2.80% | ||
Repayment of loan | $ 52,500 | ||
Voluntary repayment of loan | 50,000 | ||
Revolving Credit Facility | |||
Line Of Credit Facility [Line Items] | |||
Amount available to borrow | $ 230,000 |
Interest Rate Swap - Additional
Interest Rate Swap - Additional Information (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Derivative [Line Items] | |||
Reclassified from accumulated other comprehensive (loss) into Interest expense, net | $ 1,400,000 | $ 1,000,000 | |
Reclassified from accumulated other comprehensive (loss) into income tax expenses (benefit) | $ 200,000 | ||
Swap | Designated as Hedging Instrument | Cash Flow Hedging | |||
Derivative [Line Items] | |||
Fixed rate of interest | 2.96% | ||
Notional amount | $ 300,000,000 | ||
Unrealized loss of fair value | 10,000,000 | $ 12,100,000 | |
Payments related to fair value | 2,100,000 | ||
Swap | Other Accrued Liabilities Current [Member] | Designated as Hedging Instrument | Cash Flow Hedging | |||
Derivative [Line Items] | |||
Unrealized loss of fair value | 8,600,000 | 8,500,000 | |
Swap | Other Noncurrent Liabilities [Member] | Designated as Hedging Instrument | Cash Flow Hedging | |||
Derivative [Line Items] | |||
Unrealized loss of fair value | $ 1,400,000 | $ 3,600,000 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2021 | |
Stock Options | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Award vesting period | 3 years |
Options expiration period | 10 years |
Minimum | RSUs | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Award vesting period | 1 year |
Minimum | PSUs | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Share units vesting percentage | 0.00% |
Share units performance period | 3 years |
Maximum | RSUs | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Award vesting period | 4 years |
Maximum | PSUs | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Share units vesting percentage | 200.00% |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of RSU Activity (Details) - RSUs shares in Thousands | 3 Months Ended | |
Mar. 31, 2021$ / sharesshares | ||
Number of Share Units | ||
Share Units, Outstanding as of December 31,2020 | shares | 4,061 | |
Share Units, Granted | shares | 1,351 | |
Share Units, Vested and delivered | shares | (1,171) | |
Share Units, Forfeited or cancelled | shares | (37) | |
Share Units, Outstanding as of March 31,2021 | shares | 4,204 | |
Weighted- Average Grant Date Fair Value | ||
Weighted- Average Grant Date Fair Value, Outstanding as of December 31, 2020 | $ / shares | $ 8.31 | |
Weighted-Average Grant Date Fair Value, Granted | $ / shares | 15.17 | |
Weighted-Average Grant Date Fair Value, Vested and delivered | $ / shares | 8.20 | |
Weighted- Average Grant Date Fair Value, Forfeited or cancelled | $ / shares | 8.54 | |
Weighted- Average Grant Date Fair Value, Outstanding as of March 31,2021 | $ / shares | $ 10.54 | [1],[2] |
[1] | Included in “Outstanding as of March 31, 2021” are 108 shares of Restricted Stock that were delivered, but not yet vested | |
[2] | Included in “Outstanding as of March 31, 2021” are 91 RSUs that were vested, but not yet delivered |
Stock-Based Compensation - Su_2
Stock-Based Compensation - Summary of RSU Activity (Parenthetical) (Details) - RSUs shares in Thousands | 3 Months Ended |
Mar. 31, 2021shares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
RSUs vested but not yet delivered | 108 |
RSUs vested but not yet delivered | 91 |
Stock-Based Compensation - Su_3
Stock-Based Compensation - Summary of PSU Activity (Details) - PSUs | 3 Months Ended |
Mar. 31, 2021$ / sharesshares | |
Number of Share Units | |
Share Units, Outstanding as of December 31,2020 | shares | 730,000 |
Share Units, Granted | shares | 0 |
Share Units, Vested and delivered | shares | (588,000) |
Share Units,Forfeited | shares | 0 |
Share Units, Outstanding as of March 31,2021 | shares | 142,000 |
Weighted- Average Grant Date Fair Value | |
Weighted- Average Grant Date Fair Value, Outstanding as of December 31, 2020 | $ / shares | $ 9.28 |
Weighted-Average Grant Date Fair Value, Granted | $ / shares | 0 |
Weighted-Average Grant Date Fair Value, Vested and delivered | $ / shares | 5.74 |
Weighted- Average Grant Date Fair Value, Forfeited or cancelled | $ / shares | 0 |
Weighted- Average Grant Date Fair Value, Outstanding as of March 31,2021 | $ / shares | $ 23.98 |
Stock-Based Compensation - Su_4
Stock-Based Compensation - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Number of Share Units | ||
Share Units, Outstanding as of December 31,2020 | 513,000 | |
Share Units, Granted | 291,000 | |
Share Units, Exercised | 0 | |
Share Units, Forfeited | 0 | |
Share Units, Outstanding as of March 31,2021 | 804,000 | 513,000 |
Exercisable as of March 31, 2021 | 0 | |
Weighted- Average Grant Date Fair Value | ||
Weighted- Average Grant Date Fair Value, Outstanding as of December 31, 2019 | $ 2.80 | |
Weighted- Average Grant Date Fair Value, Granted | 9.63 | |
Weighted- Average Grant Date fair Value, Exercised | 0 | |
Weighted- Average Grant Date Fair Value, Forfeited | 0 | |
Weighted- Average Grant Date Fair Value, Outstanding as of March 31, 2020 | 5.27 | $ 2.80 |
Weighted- Average Grant Date Fair Value, Exercisable as of March 31, 2021 | $ 0 | |
Outstanding as of December 31, 2020 | 9 years 3 months 29 days | 9 years 2 months 19 days |
Aggregate Intrinsic Value Outstanding, as of December 31, 2020 | $ 3,880 | $ 3,028 |
Stock-Based Compensation - Su_5
Stock-Based Compensation - Summary of Fair Value of Stock Options Granted are Estimated Using Black Scholes Option Pricing Model (Details) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions And Methodology [Abstract] | ||
Risk-free interest rate | 1.15% | 1.01% |
Weighted-average volatility | 69.00% | 53.08% |
Dividend yield | 0.00% | 0.00% |
Expected years until exercise | 6 years 6 months | 6 years 6 months |
Earnings (Loss) Per Share - Com
Earnings (Loss) Per Share - Computation of Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Earnings Per Share [Abstract] | ||
Net income (loss) | $ 5,278 | $ (787,434) |
Basic weighted-average common shares outstanding | 67,787 | 66,938 |
Effect of dilutive stock-based compensation awards (1) | 2,467 | 0 |
Diluted weighted-average common shares outstanding | 70,254 | 66,938 |
Earnings (loss) per share, basic | $ 0.08 | $ (11.76) |
Earnings (loss) per share, diluted | $ 0.08 | $ (11.76) |
Earnings (Loss) Per Share - C_2
Earnings (Loss) Per Share - Computation of Earnings (Loss) Per Share (Parenthetical) (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Earnings Per Share [Abstract] | ||
Potential common shares excluded from diluted weighted-average shares outstanding | 1,815 | 4,516 |
Other Income (Expense), net (De
Other Income (Expense), net (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Other Income And Expenses [Abstract] | |
Impairment of non-marketable investments | $ 9.4 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate, income tax expense percentage | 19.80% | 14.60% |
Federal statutory rate | 21.00% | 21.00% |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Income Tax Rate Varied from Statutory Federal Income Tax Rate (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Income tax provision at statutory rate | $ 1,383 | |
State income taxes, net of federal income tax benefit | 236 | |
Stock-based compensation | (2,679) | |
Uncertain tax positions | 870 | |
Valuation allowance | 1,802 | |
Other, net | (306) | |
Income tax expense | $ 1,306 | $ (134,656) |
Federal statutory rate | 21.00% | 21.00% |
State income taxes, net of federal income tax benefit, percent | 3.60% | |
Stock-based compensation | (40.70%) | |
Uncertain tax positions | 13.20% | |
Valuation allowance, percent | 27.30% | |
Other, net, percent | (4.60%) | |
Income tax expense | 19.80% | 14.60% |