CARS.COM Fourth Quarter and Full Year 2017 Earnings March 6, 2018 - PowerPoint PPT Presentation

CARS.COM Fourth Quarter and Full Year 2017 Earnings March 6, 2018

Forward-Looking Statements This presentation contains “forward - looking statements” within the meaning of the federal securities laws. All statements other than statements of historical facts are forward-looking statements. Forward-looking statements include information concerning our business strategies, plans and objectives, market potential, future financial performance, planned operational and product improvements, liquidity and other matters. These statements often include words such as “believe,” “expect,” “project,” “anticipate,” “intend,” “plan,” “estimate,” “target,” “seek,” “will,” “may,” “would,” “should,” “could,” “forecasts,” “mission,” “strive,” “more,” “goal” or similar expressions. Forward -looking statements are based on our current expectations, beliefs, estimates, projections and assumptions, based on our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we think are appropriate. These statements are expressed in good faith and we believe these judgments are reasonable. However, you should understand that these statements are not guarantees of performance or results. Our actual results could differ materially from those expressed in the forward-looking statements. Given these uncertainties, forward-looking statements should not be relied on in making investment decisions. Forward-looking statements are subject to a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from those expressed in the forward-looking statements contained in this presentation. Such risks, uncertainties, and other important factors include, among others, risks related to our business, our separation from our parent company and our common stock. For a detailed discussion of many of these risks and uncertainties, see the section entitled “Risk Factors” in our Registration Sta tement on Form 10, which was filed with the Securities and Exchange Commission on May 4, 2017 (the “Registration Statement”). All forward -looking statements contained in this presentation are qualified by these cautionary statements. The forward-looking statements contained in this presentation speak only as of the date of this presentation. We undertake no obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, or changes in future operating results over time or otherwise. Comparisons of results between current and prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data. The forward-looking statements in this presentation are intended to be subject to the safe harbor protection provided by the federal securities laws. 2

Non-GAAP Financial Measures This presentation contains adjusted EBITDA, adjusted EBITDA margin, adjusted net income and free cash flow. These are not financial measures as defined by GAAP. These financial measures are presented as supplemental measures of operating performance because we believe they provide meaningful information regarding our performance and provide a basis to compare operating results between periods. In addition, we use adjusted EBITDA as a compensation measure. In addition, these non-GAAP financial measures are frequently used by our lenders, securities analysts, investors and other interested parties to evaluate companies in our industry. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is included in the appendix to this presentation. Other companies may define or calculate these measures differently, limiting their usefulness as comparative measures. Because of these limitations, these non-GAAP financial measures should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP. Definitions of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP financial measures are presented in the tables below. We define adjusted EBITDA as net income before (1) interest expense, net, (2) provision for income taxes, (3) depreciation, (4) amortization of intangible assets, (5) stock-based compensation, (6) write-off and impairments of assets, plus (7) certain other one-time or non-cash charges including transaction related costs, restructuring costs and costs related to the headquarters move. Amortization of unfavorable contract liability is not adjusted out of adjusted EBITDA. We define adjusted net income as net income excluding the after-tax impact of (1) amortization of intangible assets, (2) stock-based compensation, (3) write-off and impairments of assets, and (4) certain other one-time or non-cash charges including transaction related costs, restructuring costs and costs related to the headquarters move. Amortization of unfavorable contract liability is not adjusted out of adjusted net income. We define free cash flow as net cash flow provided by operating activities less capital expenditures, including purchases of property and equipment and capitalization of internal-use software development costs. 3

Corporate Actions since Spin-off • Completed tax-free spinoff on May 31, 2017, began trading on NYSE, regular way, June 1, 2017 • Recruited 8 person board, 7 independent members including Chairman, Scott Forbes Spin-off May 31, 2017 • Consummated $900 million senior credit facility, to fund $650 million payment to former parent • tronc agreement converted 8 markets on February 1, 2018, including L.A. and Chicago Accelerated Affiliate • McClatchy agreement converts 22 markets in phases, no later than October 1, 2018 Conversions • In 2018, 60% of wholesale revenue will be converted to retail • In February 2018, acquired privately-held Dealer Inspire and Launch Digital Marketing • Extends Cars.com’s reach into high-growth digital channels Strategic Acquisitions • Provides substantial opportunities for continued product leadership and improved attribution 4

Operational Highlights since Spin-off • Salesperson Connect: makes the consumer experience more personable, intelligent and impactful • Price Badging: gives better context about the price of a car to help simplify and enhance their car shopping experience • Platform Enhancements: Best Match sort, powered by customer algorithm, improved search and guided navigation, smart Product Innovation filters, speed improvements (TTI, TTL) • Implementation of Lean-Agile: enables us to run hundreds of experiments monthly, exponentially more than prior structure • Lot Insights technology patent: allows for more precise, accurate, location-based consumer data for Cars.com dealer partners Attribution • Salesperson Connect: dealers know connections are coming from Cars.com, the only marketplace with this tool • Reviews: attribution through location based reviews • #1 in active app users • #1 rated app in both iOS and Android Mobile Leadership • Mobile traffic (browser and app traffic) has grown 6% year over year • Mobile traffic represented 59% of total traffic in 2017 (app traffic 24% of total traffic) • Traffic stabilization throughout 2017; Year to date 2018 traffic grew 6% YOY • Enhanced SEO team resources and continued work with third party SEO expert SEO & Traffic Investments • SEO showing steady progress with tight coordination of new product/feature launches, content optimization and site improvements • Incremental marketing in 2017 and 2018 to generate traffic and connections • Marketing Impactful advertising: delivered the story of our product and our brand with exceptional relevance • Improved brand awareness and momentum • Increase in branded search as consumers seek out Cars.com 5

Acquisition of Dealer Inspire/LDM: Compelling Strategic & Financial Rationale Integrates rapidly growing digital dealer product suite 1 Broadens Cars.com’s capabilities, deepens dealer connections and improves attribution 2 3 Combines complementary assets to create a unique, end-to-end car shopping experience Accelerates growth, extends dealer solutions, targeting high-growth channels 4 5 Significant synergy opportunities and long-term growth support investment returns 6

Acquisitions – Expand Dealer Product Offerings: Digital Value Chain When integrated with the Cars.com online marketplace, offers dealers the most sophisticated and sought-after solutions to help them sell more cars and improve operating efficiencies. DISCOVER SHOP CONNECT BUY FUEL Launch Digital Marketing Dealer Inspire Conversations Online Shopper Dynamic inventory Customized marketing Powerful A.I. messaging End-to-end digital retailing Flexible, custom designed advertising program and customer acquisition platform that centralizes solution empowers shoppers website platforms creates customized ads solutions customer communication, to compare a wide range of supporting highly and keyword lists based improves quality and speed financial considerations as personalized digital on real time inventory of response time, and they complete their campaigns data and logic decreases operating costs purchase online 7