Cars.com is a Chicago-based online auto marketplace operating as Cars Commerce, with the Cars.com flagship marketplace, the dealer websites, the trade and appraisal tools, and the proprietary in-market media solutions serving dealers and OEMs across the U.S. market, and the company is in the middle of a fiscal second quarter that demonstrates the kind of Marketplace-growth pivot the online auto marketplace cohort has been waiting for. Q2 2026 revenue of $179.9 million was 1 percent above the prior-year quarter's $178.7 million, the Marketplace revenue grew over 7 percent year over year to its highest level since 2021, the net income of $14.3 million was 103 percent above the prior-year quarter's $7.0 million, and the Adjusted EBITDA of $53.0 million was 4 percent above the prior-year quarter's $50.9 million. The combination of the Marketplace revenue growth, the net income growth, and the Adjusted EBITDA outperformance is the cleanest single-sentence read on what the online auto marketplace business model is producing, and the combination is the source of the operating-leverage spread the equity offers the buy-side.
The numbers tell the story with the kind of operational detail the online auto marketplace equity has been waiting for. The Q2 2026 subscription-based Dealer revenue of $163.3 million was 3 percent above the prior-year quarter's $158.5 million, primarily driven by improved Marketplace value delivery and dealer count, partially offset by a decline in media products. The OEM and National revenue of $13.6 million was 18 percent below the prior-year quarter's $16.6 million, consistent with previously communicated expectations of OEM advertising pressure. The H1 2026 revenue of $360.2 million was 0.7 percent above the prior-year period's $357.8 million.
The total operating expenses of $152.1 million in the quarter were 7 percent below the prior-year quarter's $163.5 million, with the decline driven by lower depreciation and amortization and broadly down expenses reflecting improving operating leverage and a partial quarter of efficiencies from April cost reduction activities. The adjusted operating expenses of $144.3 million were 6 percent below the prior-year quarter, with the same factors driving the decline.
The operating income of $27.9 million in the quarter was 82.8 percent above the prior-year quarter's $15.2 million, and the H1 2026 operating income of $44.5 million was 105.1 percent above the prior-year period's $21.7 million. The operating income growth is the cleanest single read on the operating-leverage spread the company is producing, and the operating income growth is the source of the net income growth.
The net income of $14.3 million in the quarter was 103 percent above the prior-year quarter's $7.0 million, with the change primarily attributable to the improved operating income. The diluted EPS of $0.25 in the quarter was 127 percent above the prior-year quarter's $0.11, with the per-share growth reflecting the operating income improvement and the share repurchase activity that has reduced the weighted-average diluted share count from 63.8 million in the prior-year quarter to 56.7 million in the most recent quarter.
The Adjusted EBITDA of $53.0 million in the quarter was 4 percent above the prior-year quarter's $50.9 million, and the Adjusted EBITDA margin of 29.4 percent was 90 basis points above the prior-year quarter's 28.5 percent. The Adjusted EBITDA margin outperformance against the guidance range of 28 percent to 29 percent is the cleanest single read on the operating-leverage spread the company is producing, and the Adjusted EBITDA margin is the source of the operating profile the company is producing.
The question the next four quarters resolve is whether the Marketplace revenue growth is sustainable at the 7 percent year-over-year pace, and whether the OEM and National revenue decline stabilizes or continues. A second-half print that continues the 5 to 7 percent Marketplace revenue growth and stabilizes the OEM and National revenue would confirm the operating profile is sustainable. A second-half print that shows Marketplace revenue growth decelerating or OEM and National revenue continuing to decline would force the market to reprice the equity for a more modest terminal value.