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Dec 28, 2023 159 likes •421 views

RESEARCH & STRATEGY Digital Marketplaces: The Business Model of the Internet Age Marvin Fong, CFA E-Commerce 212.527.3562 | mfong@btig.com PLEASE READ: IMPORTANT DISCLOSURES AND ANALYSTS CERTIFICATION APPEAR IN APPENDIX E-commerce:

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Digital Marketplaces: The Business Model of the Internet Age

RESEARCH & STRATEGY

Marvin Fong, CFA

E-Commerce 212.527.3562 | mfong@btig.com

PLEASE READ: IMPORTANT DISCLOSURES AND ANALYST’S CERTIFICATION APPEAR IN APPENDIX

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E-commerce: Digital Marketplaces

2 Marvin Fong, CFA | E-Commerce

Initiating Coverage on the following companies: ▪ Etsy, Inc. (ETSY, Buy, $59 PT; Mkt Cap: $6.8B) ▪ Multiple growth drivers; buyer reactivation is a free option not in our numbers ▪ Care.com, Inc. (CRCM, Buy, $23 PT; Mkt Cap $717MM) ▪ A care supercycle is coming and Care.com is the online leader with a growing portfolio of services ▪ MercadoLibre, Inc. (MELI, Buy, $395 PT; Mkt Cap $14.4B) ▪ Creating an integrated payments/e-commerce ecosystem in Latin America ▪ History suggests just 1 or 2 companies will dominate in payments and we like MELI’s prospects ▪ CarGurus, Inc. (CARG, Buy, $48 PT; Mkt Cap: $4.6B) ▪ Largest user base in the U.S., but only #3 by revenue ▪ Entering billion dollar adjacent markets ▪ TrueCar, Inc. (TRUE, Buy, $13 PT; Mkt Cap: $1.1B) ▪ Expectations have been reset to more reasonable levels; transformational changes coming in 2019 ▪ Cars.com, Inc. (CARS, Neutral; Mkt Cap: $1.8B) ▪ We believe CARS is being crowded out of dealers’ ad budgets ▪ Reportedly up for sale but we believe economics are not there for a financial buyer

PLEASE READ: IMPORTANT DISCLOSURES AND ANALYST’S CERTIFICATION APPEAR IN APPENDIX

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E-commerce: Digital Marketplaces

3 Marvin Fong, CFA | E-Commerce

Overview: E-commerce & Digital Marketplaces ▪ E-commerce is 9% of U.S. retail sales, but 16% ex. autos, food and prescription drugs ▪ We estimate retail sales will reach 28% share at maturity ▪ 40% of e-commerce in the U.S. and 50% globally occurs on a digital marketplace ▪ Marketplaces are powerful investment stories ▪ Rapid growth: the top 75 marketplaces globally grew 27% in 2017 ▪ Network effects, asset light and high margin BTIG Industry Analysis ▪ There’s more to the space than just Amazon (AMZN, Not Rated) ▪ 55 of the top 75 global marketplaces are growing faster than the U.S. e-commerce industry (16%) ▪ 10 things every investor should know about the future of e-commerce E-commerce: Digital Marketplaces

PLEASE READ: IMPORTANT DISCLOSURES AND ANALYST’S CERTIFICATION APPEAR IN APPENDIX

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E-commerce: Digital Marketplaces

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10 Things Every Investor Needs to Know About the Future of E-commerce ▪ Autos, grocery and prescription drugs ($2.2T in spending) are seeing a revolution in e-fulfillment ▪ A global online land grab will drive even more cross-border M&A ▪ Amazon is forcing retail into Google’s Arms ▪ Despite questionable economics, same-day delivery will remain hot ▪ The virtuous cycle of store closures will continue ▪ Online laggards are getting serious about e-commerce ▪ Half of brick & mortar sales still involve the Internet ▪ Online advertising is continuously becoming more effective ▪ As LTE before it, 5G will be a game changer ▪ Payments will play a pivotal role in the evolution of e-commerce E-commerce: Digital Marketplaces

PLEASE READ: IMPORTANT DISCLOSURES AND ANALYST’S CERTIFICATION APPEAR IN APPENDIX

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▪ Marketplaces are investable even in the age of online giants ▪ In 15 out of 21 cases, impacted stocks were higher one year later, or 71% of the time

Coverage Status: Expedia (EXPE, Not Covered), Yelp (YELP, Not Covered), GrubHub (GRUB, Not Covered), Booking Holdings (BKNG, Not Covered), Care.com (CRCM, Buy, $23 PT), ANGI Homeservices (ANGI, Not Rated), Etsy (ETSY, Buy, $59 PT), TrueCar (TRUE, Buy, $13 PT), TEGNA (TGNA, Not Rated), Autoweb (AUTO, Not Rated), Wayfair (W, Not Rated), MercadoLibre (MELI, Buy, $395 PT), Match Group (MTCH, Neutral; Analyst: Brandon Ross), Cars.com (CARS, Neutral) Source: Company reports, BTIG.

Date Market Entrant Action Companies Affected Day of 1 Week Later 3 Months Later 1 Year Later 7/2/10 Google Acquires ITA EXPE (3%) (1%) 49% 56% 7/2/10 Google Acquires ITA BKNG (3%) 12% 91% 188% 12/17/12 Facebook Launches Nearby feature YELP (3%) (5%) 29% 243% 8/22/14 Uber UberFresh (later UberEats) GRUB (8%) (10%) (19%) (34%) 11/13/14 Facebook Launches Places directory YELP (4%) (4%) (24%) (55%) 11/20/14 Amazon Amazon Destinations EXPE (2%) (1%) 4% 47% 11/20/14 Amazon Amazon Destinations BKNG (0%) 1% (3%) 11% 3/30/15 Amazon Launches Home Services CRCM (2%) (10%) (22%) (22%) 3/30/15 Amazon Launched Home Services ANGI (2%) (6%) (0%) 30% 5/22/15 Amazon Launches Handmade ETSY (2%) (4%) (19%) (52%) 8/26/15 Amazon News Amazon testing restaurant delivery service GRUB (3%) 8% 6% 56% 12/15/15 Facebook News Facebook testing local business reviews YELP (9%) (6%) (29%) 19% 8/25/16 Amazon Launches Amazon Vehicles TRUE (10%) (7%) 19% 54% 8/25/16 Amazon Launches Amazon Vehicles TGNA (2%) (5%) 3% (8%) 8/25/16 Amazon Launches Amazon Vehicles AUTO (5%) (3%) (22%) (54%) 4/24/17 Amazon New furniture delivery options for marketplace sellers W (5%) 2% 65% 50% 5/12/17 Amazon WSJ highlights Amazon's interest in furntirue & appliance W (6%) (4%) 7% 31% 5/19/17 Facebook Integrates food delivery with main navigation page GRUB (2%) (1%) 22% 136% 9/22/17 Amazon Partners with Olo resturant software GRUB (3%) (2%) 34% 154% 10/12/17 Amazon Reports Will Launch Brazil Marketplace MELI (10%) (14%) 24% 25% 11/7/17 Amazon Amazon launches two new private label furniture brands W (6%) 1% 39% 110% 5/1/18 Facebook Announces dating feature MTCH (22%) (23%) (25%) n/a 5/16/18 Facebook Updates to dynamic and lead gen ads for autos TRUE (4%) 2% 32% n/a 5/16/18 Updates to dynamic and lead gen ads for autos CARS (4%) (2%) 9% n/a Price Action

E-commerce: Digital Marketplaces

PLEASE READ: IMPORTANT DISCLOSURES AND ANALYST’S CERTIFICATION APPEAR IN APPENDIX

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BTIG Valuation Framework ▪ What we do not use to value marketplaces: GMV ▪ We see valuation is a function of 3 factors: Growth, Margin Expansion and Fundamentals ▪ Long-term EBITDA Growth has robust explanatory power – captures both growth and margins E-commerce: Digital Marketplaces

2.6x 1.6x 1.0x 0.9x 0.4x 0.3x 0.2x

0. 0x 0. 5x 1. 0x 1. 5x 2. 0x 2. 5x 3. 0x

Company A Company B Company C Company D Company F Company G Company H

Source: Factset, BTIG. Source: Factset, BTIG.

Highly variable

R² = 0.88

0x 5x 10x 15x 20x 25x 30x 35x 40x 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% EV/EBITDA (2019) 5-Year Compound EBITDA Growth S&P 500

PLEASE READ: IMPORTANT DISCLOSURES AND ANALYST’S CERTIFICATION APPEAR IN APPENDIX

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E-commerce: Digital Marketplaces

7 Marvin Fong, CFA | E-Commerce

Etsy (ETSY, Buy, $59 PT; Mkt Cap $6.8B) : Investors Should Tune in for This Handmade’s Tale ▪ Leading marketplace for handmade/small-batch goods ▪ Why are we positive on the stock? ▪ Amazon-baptized business model ▪ Numerous underappreciated growth drivers ▪ Promoted Listings: Can triple in 5 years ▪ International: 35% of GMS going to 50% ▪ Conversion: $700-$800MM opportunity ▪ Commissions have some room to go up ▪ What is the market missing? ▪ Huge pool of inactive users (32MM vs. 37MM active) ▪ Every 5% reactivated grows GMS ~4% ▪ Paid GMS IRR >140% ▪ Promoted Listings economics only at ~60% of potential

Key Metrics

▪ Price (11/12/18): $50.71 ▪ Enterprise Value: $6.3B ▪ 52-Wk High/Low: $15.27 - $55.71 ▪ Current Valuation: 33x 2019 Adj. EBITDA ▪ Target Valuation: 31x 2020 Adj. EBITDA ▪ Stock Performance ▪ Revenue Mix (2018E)

Source: Company reports, BTIG. Source: IDC.

E-commerce: Digital Marketplaces

PLEASE READ: IMPORTANT DISCLOSURES AND ANALYST’S CERTIFICATION APPEAR IN APPENDIX

Shipping Labels 5% Promoted Listings 21% Pattern & Other 2% Transaction Revenue 29% Listing Dees 13% Payments 30%

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E-commerce: Digital Marketplaces

8 Marvin Fong, CFA | E-Commerce

How Our Etsy Call is Differentiated ▪ 5 Buys, 5 Neutrals, No Sells ▪ We lay out a road map to 20% revenue CAGR over the next 5 years ▪ Proprietary metrics we calculated based on our extensive analysis ▪ Number of inactive buyers (IR indicated no other analyst had done this) ▪ Traffic conversion rates and the total GMS upside from increasing conversion ▪ Promoted Listings potential ▪ IRR calculation on Paid GMS

PLEASE READ: IMPORTANT DISCLOSURES AND ANALYST’S CERTIFICATION APPEAR IN APPENDIX

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E-commerce: Digital Marketplaces

9 Marvin Fong, CFA | E-Commerce

Care.com (CRCM, Buy, $23 PT; Mkt Cap $717MM): Buy for the Coming Care Supercycle ▪ Leading marketplace for finding care providers ▪ Why are we positive on the stock? ▪ Only a fraction of $185B TAM is transacted online ▪ Powerful trends are moving in CRCM’s direction ▪ Aging pop: # frail adults will rise 3x faster next decade ▪ Rising incidence of no stay-at-home-parents ▪ We expect more back-up care benefits at lower pay- scale corporations who employ tens of thousands ▪ The public discourse has changed ▪ Growing customer lifetime value ▪ What is the Market Missing? ▪ 86% of users in CRCM’s history are dormant ▪ Explore will fill a notable service gap ▪ In-home senior care leader: 4x the listings of rival ▪ Long runway of growth in back-up care (5% co’s offer) Key Metrics

▪ Price (11/12/18): $18.46 ▪ Enterprise Value: $575MM ▪ 52-Wk High/Low: $14.37 - $22.95 ▪ Current Valuation: 15x 2019 Adj. EBITDA ▪ Target Valuation: 16x 2020 Adj. EBITDA ▪ Stock Performance ▪ Revenue Mix (2018E)

Source: Company reports, BTIG. Source: IDC. U.S. Matching 63% HomePay 14% Care@Work 9% International Matching 10% Recruiting Solutions 4%

PLEASE READ: IMPORTANT DISCLOSURES AND ANALYST’S CERTIFICATION APPEAR IN APPENDIX

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E-commerce: Digital Marketplaces

10 Marvin Fong, CFA | E-Commerce

How Our Care.com Call is Differentiated ▪ 2 Buys, 2 Neutrals, 1 Sell ▪ Proprietary metrics & analysis ▪ In-depth comparison vs. SitterCity (Private) ▪ Traffic conversion rate ▪ Number of inactive users - we estimate 2 million dormant households

PLEASE READ: IMPORTANT DISCLOSURES AND ANALYST’S CERTIFICATION APPEAR IN APPENDIX

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E-commerce: Digital Marketplaces

11 Marvin Fong, CFA | E-Commerce

MercadoLibre (MELI, Buy, $395 PT; Mkt Cap $14.4B): Eyes on the Payments Prize ▪ Largest marketplace in LatAm w/growing Payments platform ▪ Why are we positive on the stock? ▪ Well-positioned to create an integrated e- comm/payments digital ecosystem across LatAm ▪ Payments should be re-rated higher ▪ Logical, though hefty, M&A target ▪ After 2 years of decline, expect margin inflection in 2019 ▪ What is the market missing? ▪ We believe there is too much focus on mobile POS and not enough on digital wallets ▪ Fintech regulatory fears weigh, but most fintechs will be similarly hurt and we think MELI is better positioned than most ▪ Company does not provide guidance, creating

pportunity for thoughtful analysis

▪ Amazon is a risk, but w/just 3% e-comm penetration in LatAm, room for many players Key Metrics

▪ Price (11/12/18): $322.00 ▪ Enterprise Value: $14.3B ▪ 52-Wk High/Low: $217.06 - $417.91 ▪ Stock Performance ▪ Revenue Mix (gross, 2018E)

58% 33% 4% 4% 1%

Marketplace Payments Advertising Classifieds Enterprise Solutions & MercadoShops Source: Company reports, BTIG. Source: IDC.

PLEASE READ: IMPORTANT DISCLOSURES AND ANALYST’S CERTIFICATION APPEAR IN APPENDIX

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E-commerce: Digital Marketplaces

12 Marvin Fong, CFA | E-Commerce

How Our MercadoLibre Call is Differentiated ▪ 10 Buys, 4 Neutrals, 2 Sells ▪ Proprietary metrics & analysis ▪ Latin America E-commerce forecast (incorporating recent developments) and Payments primer ▪ Extensive discussion of competitor omnichannel actions ▪ Discussion on M&A prospects ▪ Estimate of the digital wallet/QR-code opportunity ▪ Our estimate of $14B in digital wallet market cap in 2020 with upside to $22B ▪ Sum-of-the-parts valuation

Source: Factset, company reports, BTIG.

Revenue Value Item Multiple Per Share Enhanced Marketplace 6.0x $198 $198 Payments:

mPOS Revenue 6.5x $34 Third-Party Websites 5.5x $18 Financing Income 5.3x $53 Device Sales 0.5x $1 Other Payments 5.5x $9 On-TPV not using MercadoPago 10.0x $12 Subtotal 5.6x $128 Digital Wallet $45

Payments before Mercado Credito $173 Mercado Credito $22 Payments 5.9x $195 $195 Total Enterprise Value 6.0x $393 $393 Plus: Cash $23 Less: Debt ($21) = Equity Value $395 $395

PLEASE READ: IMPORTANT DISCLOSURES AND ANALYST’S CERTIFICATION APPEAR IN APPENDIX

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13 Marvin Fong, CFA | E-Commerce

The Online Automotive Marketplace Subsector An Industry in Transformation

E-commerce: Digital Marketplaces

PLEASE READ: IMPORTANT DISCLOSURES AND ANALYST’S CERTIFICATION APPEAR IN APPENDIX

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14 Marvin Fong, CFA | E-Commerce

Overview: Online Automotive Marketplaces ▪ A $2.7B industry within $12B of online advertising spending by car dealers ▪ Typical franchise dealer digital ad budget breakdown: ▪ Top 5 players are Cox Automotive (Private), Cars.com, CarGurus and TrueCar E-commerce: Digital Marketplaces

13% 21% 15% 3% 31% 3% 14%

All Other

Coverage status: Cox Automotive (Private), Edmunds (Private). Source: Company reports, BTIG.

Paid Search/SEO 30-40% Online Marketplaces 20-25% Social media 15-25% Email 5% Video/Display 5-10% Other 5-15%

Source: PCG Companies, dealersunited.com, ROIDetective, BTIG.

PLEASE READ: IMPORTANT DISCLOSURES AND ANALYST’S CERTIFICATION APPEAR IN APPENDIX

Online Automotive Marketplaces

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Online Automotive Marketplaces

15 Marvin Fong, CFA | E-Commerce

BTIG Industry Analysis ▪ 2011-2016: Industry grew 12.3% annually → Growth moderated in both 2017 and 2018 ▪ Our growth decomposition suggest the marketplace sector benefited mostly from the general migration

f ad dollars to online, followed by more dealer ad spending per car sold

▪ Our 2018-2023 outlook: Industry growth of ~4.5% ▪ Can you invest in a 4.5% Growth Sector? ▪ Significant disruption as incumbents cede share to upstarts is creating winners and losers ▪ Growth can be found outside of the U.S. Online Automotive marketplace space E-commerce: Digital Marketplaces

Source: Company reports, BTIG. Source: Company reports, Borrell Associates, BTIG.

Factor Pessimistic Base Optimistic Δ Number of Cars Sold to Individuals by Dealers

1.0%

1.0% 2.0% Δ Total Dealer Advertising Spend Per Car Sold 0.0% 1.0% 2.0% Δ Online Penetration of Dealer Advertising Spend 2.0% 2.5% 3.0% Δ Auto Marketplace Share of Dealer Online Advertising Spend

1.0%

0.0% 1.0% Total Automotive Markeplace Industry Growth 0.0% 4.5% 8.0% 2023 Online Automotive Marketplace Sector Size $2.7B $3.4B $4.0B Factor 2011-2016 2017 2018E Δ Number of Cars Sold to Individuals by Dealers 2.7% 1.4% 0.3% Δ Total Dealer Advertising Spend Per Car Sold

0.7%

5.5%

5.3%

Δ Online Penetration of Dealer Advertising Spend 10.6% 0.8% 4.3% Δ Auto Marketplace Share of Dealer Online Advertising Spend

0.4%
2.3%

4.0% Total Automotive Markeplace Industry Growth 12.1% 5.3% 3.3% PLEASE READ: IMPORTANT DISCLOSURES AND ANALYST’S CERTIFICATION APPEAR IN APPENDIX

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Online Automotive Marketplaces

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CarGurus (CARG, Buy, $48 PT; Mkt Cap $4.6B): On a Path Toward Global Automotive Marketplace Domination ▪ Largest U.S. car buying site by traffic and engagement, but

nly #3 by revenue

▪ Why are we positive on the stock? ▪ Industry-leading user experience ▪ Entering billion dollar adjacencies (SEO/SEM & Int’l) ▪ What is the market missing? ▪ Yes, the new car market is getting choppy, but used cars is even bigger and a stabilizing force ▪ Top 2 incumbents have >50% share that CARG’s can continue to displace Key Metrics

▪ Price (11/12/18): $40.91 ▪ Enterprise Value: $4.5B ▪ 52-Wk High/Low: $28.00 - $57.25 ▪ Stock Performance ▪ Revenue Mix (2018E)

Source: Company reports, BTIG. Source: IDC.

Marketplace Subscription 89%

Advertising & Other 11%

PLEASE READ: IMPORTANT DISCLOSURES AND ANALYST’S CERTIFICATION APPEAR IN APPENDIX

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Online Automotive Marketplaces

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17 Marvin Fong, CFA | E-Commerce

How Our CarGurus Call is Differentiated ▪ 5 Buys, 2 Neutrals ▪ Proprietary metrics & analysis ▪ 5-year revenue roadmap ▪ In-depth international market analysis ▪ Proprietary estimate of Average Annual Revenue Per Subscribing Dealer (AARSD) at maturity ▪ Sum-of-the-parts valuation

United States 2020 EBITDA $123 EV/EBITDA Multiple 35x Enterprise Value $4,311 International 2023 Revenue $163 EV/Revenue Multiple 8x 2023 Enterprise Value $1,366 NPV (2019 EOY) $933 Total Enterprise Value $5,243 + Cash $209

Debt

$0 = Equity Value $5,452 Shares 114 Value Per Share $48 $48

Source: Company reports, BTIG.

PLEASE READ: IMPORTANT DISCLOSURES AND ANALYST’S CERTIFICATION APPEAR IN APPENDIX

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Online Automotive Marketplaces

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18 Marvin Fong, CFA | E-Commerce

TrueCar (TRUE, Buy, $13 PT; Mkt Cap $1.1B): With Expectations Reset, a Transformative 2019 Awaits ▪ #4 automotive marketplace with a unique, closed-loop model ▪ Why are we positive on the stock? ▪ Expectations have been reset ▪ Just improving conversion on existing traffic would yield substantial revenue growth with high flow-through ▪ 3Q operational issues should be resolved next year ▪ Site redesign next year will address key pain points ▪ OEM is a multibillion adjacent market ▪ Valuation is approaching 5-year lows ▪ What is the market missing? ▪ Expectations reset is overshadowing the fact key performance metrics are trending positively ▪ New cars sold per dealer up 3% in a down year Key Metrics

▪ Price (11/12/18): $10.07 ▪ Enterprise Value: $873MM ▪ 52-Wk High/Low: $8.75 - $14.55 ▪ Current Valuation: 28x 2019 Adj. EBITDA* ▪ Target Valuation: 25x 202 Adj. EBITDA* ▪ Stock Performance ▪ Revenue Mix (2018E)

Source: Company reports, BTIG. Source: IDC. Franchise Dealers 75% Independent Dealers 10% OEM Incentive 9% Other 5% True Trade 1% * BTIG definition of Adjusted EBITDA is less excess stock-based comp

PLEASE READ: IMPORTANT DISCLOSURES AND ANALYST’S CERTIFICATION APPEAR IN APPENDIX

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Online Automotive Marketplaces

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How Our TrueCar Call is Differentiated ▪ 6 Buys, 3 Neutrals and 2 Sells ▪ Proprietary metrics & analysis ▪ Proprietary conversion analysis ▪ Decompose growth into key drivers by both dealer and consumer metrics ▪ Proprietary TAM estimates of the OEM incentive and True Trade markets

1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 % Change in All Dealers

39% 35% 24% 15% 11% 11% 19% 24% 24% 22% 17% 12% 8% 4% 4%

% Change in Cars Sold Per Dealer

0% 3%

% Change in Units Sold 34% 34% 27% 27% 21% 21% 12% 12% 4% 4% 1% 1% 6% 6% 19% 19% 24% 24% 26% 26% 15% 15% 9% 9% 6% 6% 3% 3% 6% 6% % Change in MUVs

40% 42% 43% 33% 21% 12% 15% 19% 10% 8% 1% 3% 6% 8% 4%

% Change in Conversion Rate

1% 0% 2% 14% 19% 13% 9% 5% 0% 0%

% Change in Close Rate

12% 7%

figures in millions

2017 2017 New cars sold at retail 14.0 % of buyers who use the Internet for research 90% # of buyers who use the Internet for research 12.6 % of buyers who use the Internet who visited TrueCar 57% # of buyers who use the Internet who visited TrueCar 7.2 New cars sold on the TrueCar platform 0.7 Conversion Rate 9%

Source: J.D. Power, Company reports, BTIG. Source: Company reports, BTIG.

PLEASE READ: IMPORTANT DISCLOSURES AND ANALYST’S CERTIFICATION APPEAR IN APPENDIX

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Online Automotive Marketplaces

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20 Marvin Fong, CFA | E-Commerce

Cars.com (CARS, Neutral; Mkt Cap $1.8B): Stubborn Dealer Losses May Be a Symptom of Deeper Issues ▪ #2 automotive marketplace with a combination of direct and affiliate channels ▪ Why are we neutral on the stock? ▪ We believe most of the catalysts activist identified have played out ▪ New York Post has reported CARS is for sale, but we believe reported $40 takeout price is unlikely ▪ Even at low $30s takeout, a financial buyer would struggle to achieve desirable IRR ▪ On the plus side, recent Dealer Inspire acquisition has been a home run and we expect similar deals to follow ▪ What is the market missing? ▪ Dealer attrition suggests CARS is being crowded out of ad budgets by better-performing providers Key Metrics

▪ Price (11/12/18): $25.63 ▪ Enterprise Value: $2.5B ▪ 52-Wk High/Low: $22.17 - $32.94 ▪ Current Valuation: 11x 2019 Adj. EBITDA ▪ Stock Performance ▪ Revenue Mix (2018E)

Source: Company reports, BTIG. Source: IDC.

Direct Channel 69% Advertising 16% Affiliate Channel 13% Other 2%

PLEASE READ: IMPORTANT DISCLOSURES AND ANALYST’S CERTIFICATION APPEAR IN APPENDIX

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Online Automotive Marketplaces

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How Our Cars.com Call is Differentiated ▪ 3 Buys, 2 Neutrals ▪ Proprietary metrics & analysis ▪ We unravel the difficult accounting around affiliate revenues to gauge Cars.com’s true revenue trajectory ▪ LBO analysis and in-depth discussion of M&A prospects ▪ Discussion of activist investor’s investment case and why we believe it has largely played out with little net change to the stock price

PLEASE READ: IMPORTANT DISCLOSURES AND ANALYST’S CERTIFICATION APPEAR IN APPENDIX

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Appendix: Analyst Certification and Other Important Disclosures Analyst Certification I, Marvin Fong, CFA, hereby certify that the views about the companies and securities discussed in this report are accuratelyexpressed and that I have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report. Regulatory Disclosures BTIG LLC’s (“BTIG”) ratings, effective June 12, 2017, are defined as follows: BUY – A security which is expected to produce a positive total return of 15% or greater over the 12 months following the recommendation. The BUY rating may be maintained as long as it is deemed appropriate, notwithstanding price fluctuations that would cause the target to fall outside of the 15% return. SELL – A security which is expected to produce a negative total return of 15% or greater over the next 12 months following the recommendation. The SELL rating may be maintained as long as it is deemed appropriate, notwithstanding price fluctuations that would cause the target to fall outside of the 15% return. NEUTRAL – A security which is not expected to appreciate or depreciate meaningfully over the next 12 months. NOT RATED – A security which is not rated or covered by BTIG. UNDER REVIEW – Effective immediately, coverage of the following securities is Under Review. Ratings, price targets, disclosures, and estimates for the companies listed below are suspended and should no longer be relied upon. Distribution of Ratings and Investment Banking Clients BTIG must disclose in each research report the percentage of all securities rated by the member to which the member would assign a “buy”, “neutral”

r “sell” rating. The said ratings are updated on a quarterly basis. BTIG must also disclose the percentage of subject companies within each of these

three categories for whom the member has provided investment banking services within the previous twelve months. Stocks under coverage as of the end of the most recent calendar quarter (March 31, 2019): 348 Distribution of BTIG’s Research Recommendations (as of March 31, 2019): BUY: 62.6%; NEUTRAL: 34.8%; SELL: 2.6% Distribution of BTIG’s Investment Banking Services (as of March 31, 2019): BUY: 25.7%; NEUTRAL: 9.9%; SELL: 0.00% For purposes of FINRA ratings distribution rules, BTIG’s stock ratings of Buy, Neutral and Sell fall into Buy, Hold and Sell categories, respectively.

Marvin Fong, CFA | E-Commerce

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Company Valuation and Risk Disclosures Disclosures in Research Reports Covering Six or More Companies All current required disclosures can be obtained by contacting BTIG at 825 Third Avenue, 6th Floor, New York, NY 10022 or on our website at http://www.btigresearch.com. Company–Specific Regulatory Disclosures Other Disclosures Additional Information Available Upon Request

Marvin Fong, CFA | E-Commerce

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General Disclosures Research reports produced by BTIG LLC (“BTIG”) are published for and intended to be distributed solely to BTIG institutional and corporate clients. Recipients of BTIG reports will not be considered clients of BTIG solely because they may have received such BTIG report. The research analyst(s) responsible for the preparation of this report receives compensation based upon a variety of factors,including the quality and accuracy of research, internal/client feedback, and overall Firm revenues. BTIG reports are based on public information and BTIG considers the same to be reliable, comprehensive information, but makesno representation or warranty that the reports are accurate or complete. BTIG opinions and information provided in this report are as of the date of the report and may change without notice. An issuer may be classified as “Under Review” or “Research Restricted”. In these cases, investors should consider any previous investment recommendation and/or rating to a subject company/issuer to no longer be current and should not be relied upon norconsidered a solicitation. This research report is not an offer to buy or sell or solicitation of an offer to buy or sell any security in any jurisdiction where such an offer or solicitation would be illegal. This research report was not drafted specifically for any particular individual or entity and is not a personal recommendation to participate in any particular trading strategy or transaction. Any recipient of this research report should obtain independent advice specific to their personal circumstances before undertaking any investment activity and must make their own independent evaluation of any securities or financial instruments. Facts, views or opinions presented in this report have not been reviewed by, and may not reflect information known to, employees or other professionals in the “BTIG Group” (BTIG Group includes, but is not limited to, BTIG and its parents, subsidiaries and/or affiliates). BTIG Group employees, including Sales Representatives and Traders, may provide oral or written commentary or advice that may be inconsistent with the opinions and/or views expressed in this research report. BTIG Group employees and/or its affiliates not involved in the preparation ofthis research report may have investments in securities or derivatives of securities of companies mentioned in this report that are inconsistent with the views discussed in this report.

Marvin Fong, CFA | E-Commerce

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ther factors within or beyond the companies control. Recipient of the research reports should be aware that investments in securities may pose

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Marvin Fong, CFA | E-Commerce

E-commerce: Digital Marketplaces

SLIDE 26

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Marvin Fong, CFA | E-Commerce

E-commerce: Digital Marketplaces