Cars.com Inc. (CARS) Acquires DealerClub

Cars.com Inc. (NYSE: CARS) (d/b/a "Cars Commerce" or the "Company"), an audience-driven technology company empowering automotive, today announced the acquisition of (DealerClub), a reputation-based automotive digital wholesale auction. The Company paid approximately $25 million in cash at closing. There is the potential for an additional performance-based consideration of up to $88 million based on achievement of certain financial thresholds. The transaction closed on January 23, 2025.

Transaction Highlights:

• Advances the Company's Trade & Appraisal strategy and enables entrance into a large wholesale used car market worth over $10B
• Adds a transactional revenue stream to the Company's powerful subscription business
• Expected to create long-term cross-selling opportunities and acceleration of AccuTrade adoption with an attractive full lifecycle platform that seamlessly integrates retail and wholesale operations
• Brings the transparency of reviews to the wholesale market for the first time and builds on Company's legacy as the largest provider of consumer and dealership reviews in auto

DealerClub is an emerging, dealer-to-dealer, digital wholesale auction platform that facilitates transparent and efficient transactions between automotive dealers. The company's auction model is built around a reputation-based system – the first in the industry – which promotes trust in transactions, ultimately minimizing arbitration disputes and title issues. DealerClub's commitment to innovation and dealer support aligns with broader trends in the automotive industry towards digitization and optimized inventory management. Serving more than 650 dealer customers with a strong pipeline, the company generates revenue primarily through transaction fees.

"The acquisition of DealerClub is a critical step for Cars Commerce's strategic vision to expand into the wholesale market by catering to the large dealer segment looking to gain operating and financial efficiencies by leveraging technology to trade used vehicles within a trusted network," said Alex Vetter, CEO of Cars Commerce. "By integrating DealerClub's technology onto the Cars Commerce platform, we add transactional dealer-to-dealer wholesale capabilities focused on transparency and digital efficiency, and significantly extend our influence in the wholesale market by giving power and profits back to the retail community."

DealerClub launched to customers in 2024 by Joe Neiman, founder of ACV Auctions (ACVA), who brings proven expertise in scaling similar platforms to industry-leading positions. Cars Commerce expects the transaction to have an immaterial contribution to revenue in 2025. In addition, the transaction is not expected to be accretive to Adjusted EBITDA in 2025, as the Company makes investments to scale DealerClub. More information on the transaction will be provided on Cars Commerce's Fourth Quarter/Full Year 2024 earnings call.

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