Cars.com Inc. (CARS) saw its stock price plummet by 7.97% in pre-market trading on Thursday, following the release of its fourth-quarter and full-year 2024 financial results that failed to meet analysts' expectations. The company faced significant headwinds in its core subscription-based Dealer business, leading to a revenue and earnings miss.

For the fourth quarter of 2024, Cars.com reported revenue of $180.4 million, falling short of the analyst consensus estimate of $182.5 million. The company's earnings per share (EPS) for the quarter came in at $0.49, missing the estimated EPS of $0.56 by a substantial 12.5%.

The primary factor behind the disappointing results was the underperformance of the company's Dealer revenue segment, which declined by 1% year-over-year. This decline was attributed to external pressures on dealer profitability and marketing spend, reflecting the challenging environment faced by the automotive industry.

While Cars.com did see a 15% year-over-year increase in its OEM and National revenue, driven by stronger marketing efforts from automakers, this growth was not enough to offset the weakness in the core Dealer business. The company's subscription-based Dealer revenue accounts for a significant portion of its overall revenue, making it a critical component of its financial performance.

In the earnings release, Cars.com acknowledged the challenges faced in its Dealer segment and highlighted the need to address these issues to drive future growth. The company's management expressed confidence in its ability to execute on its strategic initiatives and improve the adoption of its products and services among dealers.