Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell even higher, with the expectation that established trends will continue [1] Company Overview: CarGurus (CARG) - CarGurus currently holds a Momentum Style Score of A, indicating strong momentum characteristics [2] - The company has a Zacks Rank of 1 (Strong Buy), suggesting a favorable outlook compared to the market [3] Performance Metrics - Over the past week, CarGurus shares increased by 4.44%, while the Zacks Automotive - Replacement Parts industry rose by 5.16% [5] - In a longer timeframe, CarGurus shares have appreciated by 1.12% over the past quarter and 33.05% over the last year, outperforming the S&P 500, which saw declines of -2.56% and gains of 11.12% respectively [6] Trading Volume - The average 20-day trading volume for CarGurus is 1,038,208 shares, which serves as a bullish indicator when combined with rising stock prices [7] Earnings Outlook - In the last two months, five earnings estimates for CarGurus have been revised upwards, increasing the consensus estimate from $1.85 to $2.15 [9] - For the next fiscal year, five estimates have also moved higher, with no downward revisions noted [9] Conclusion - Given the strong performance metrics and positive earnings outlook, CarGurus is positioned as a 1 (Strong Buy) stock with a Momentum Score of A, making it a compelling investment option [11]

Core Viewpoint - Investors are increasingly seeking growth stocks that demonstrate above-average growth potential, with CarGurus identified as a strong candidate due to its favorable growth metrics and Zacks Rank [1][2]. Earnings Growth - CarGurus has a historical EPS growth rate of 3.7%, but projected EPS growth for this year is expected to be 25.1%, significantly outperforming the industry average of 15.4% [4]. Cash Flow Growth - The year-over-year cash flow growth for CarGurus stands at an impressive 183.6%, far exceeding the industry average of 6.6% [5]. - Over the past 3-5 years, the annualized cash flow growth rate for CarGurus has been 39.8%, compared to the industry average of 4.7% [6]. Earnings Estimate Revisions - The current-year earnings estimates for CarGurus have been revised upward, with the Zacks Consensus Estimate increasing by 23.9% over the past month, indicating a positive trend in earnings estimate revisions [7]. Conclusion - CarGurus has achieved a Growth Score of A and holds a Zacks Rank 1, suggesting it is a potential outperformer and a solid choice for growth investors [8][9].

Core Viewpoint - CarGurus (CARG) is positioned as a strong investment opportunity due to its improving earnings outlook and analysts raising earnings estimates [1][2] Estimate Revisions - Analysts show growing optimism for CarGurus' earnings prospects, reflected in upward revisions of earnings estimates, which historically correlate with stock price movements [2] - The current-quarter earnings estimate is projected at $0.54 per share, indicating a year-over-year increase of +31.71%, with a 33.96% rise in consensus estimates over the last 30 days [6] - For the full year, the earnings estimate stands at $2.15 per share, representing a +25% change from the previous year, with similar positive revisions noted [7] Zacks Rank - CarGurus holds a Zacks Rank 1 (Strong Buy), indicating strong agreement among analysts on upward earnings revisions, which historically leads to significant outperformance [3][8] - Stocks with Zacks Rank 1 and 2 have shown to significantly outperform the S&P 500 [8] Stock Performance - The stock has gained 20.3% over the past four weeks, driven by solid estimate revisions and positive earnings growth prospects [9]

Summary of CarGurus (CARG) FY Conference Call - May 13, 2025 Company Overview - CarGurus is the largest online marketplace for consumers and dealers to buy and sell automobiles, providing a transparent and unbiased automotive marketplace [2][3] - The company operates in the US, UK, and Canada, with a focus on enhancing dealer and consumer experiences through various functionalities [4] Key Business Insights - CarGurus has shifted from a traditional lead generation tool to a comprehensive dealer solutions provider, offering predictive intelligence and insights to improve dealer workflows [5][6] - The primary business model is subscription-based, with metrics focusing on the number of paying customers and average revenue per customer [4][5] Recent Trends and Performance - Increased engagement from dealers has been noted, with a focus on using intelligence and insights to improve retention and product stickiness [5][6] - The company has seen a significant increase in net dealer ads, attributed to better retention and the introduction of new product features [29][30] - A flight to quality is observed in the market, with dealers consolidating their partnerships with market leaders like CarGurus during uncertain times [32][35] Pricing Strategy - CarGurus maintains a value-driven pricing strategy, focusing on building long-term relationships with dealers rather than aggressively raising prices [12][15] - The average revenue per subscribing dealer has grown, with various levers for growth including upselling and cross-selling products [16][17] Innovation and AI Integration - The company is investing heavily in product and engineering, particularly in AI to enhance consumer and dealer experiences [18][19] - AI is being utilized across various functions, including predictive pricing intelligence and lead handling, to improve conversion rates for dealers [20][22][24] Market Dynamics - The marketplace currently has a balanced inventory of new and used cars, with a stronger value proposition for used cars due to consumer information disadvantages [53] - The used car market is less volatile compared to the new car market, providing a more stable environment for CarGurus [54][56] Capital Allocation and Future Growth - CarGurus is focused on investing in product innovation and exploring M&A opportunities, particularly in dealer software and data products [67][68] - The company has executed a sizable share buyback, reflecting confidence in its growth prospects [66][68] Guidance and Market Outlook - Despite macroeconomic uncertainties, CarGurus has provided a double-digit revenue growth outlook, supported by a stable subscription model and diverse customer base [42][46] - The company emphasizes the importance of online marketing channels, particularly third-party marketplaces, as a safe investment for dealers [46][47] Conclusion - CarGurus is positioned as a leader in the automotive marketplace, leveraging technology and insights to enhance dealer and consumer experiences while maintaining a focus on long-term partnerships and sustainable growth [35][39]

Group 1 - Major trade deals are positively impacting market sentiment, with major indices recovering nearly all losses since the announcement of tariffs [1] - Investors are advised to remain cautious despite the optimistic market outlook [1] - The technology sector is influenced by various themes, as highlighted by the experience of industry analysts [1] Group 2 - The article emphasizes the importance of focusing on industry trends and potential investment opportunities [1]

Core Viewpoint - CarGurus reported quarterly earnings of $0.46 per share, exceeding the Zacks Consensus Estimate of $0.42 per share, and showing an increase from $0.32 per share a year ago, indicating a positive earnings surprise of 9.52% [1] Financial Performance - The company posted revenues of $225.16 million for the quarter ended March 2025, which was a slight miss compared to the Zacks Consensus Estimate by 0.79%, but an increase from $215.8 million year-over-year [2] - Over the last four quarters, CarGurus has surpassed consensus EPS estimates four times and topped revenue estimates two times [2] Stock Performance - CarGurus shares have declined approximately 22.4% since the beginning of the year, contrasting with the S&P 500's decline of 4.3% [3] - The current Zacks Rank for CarGurus is 3 (Hold), suggesting that the shares are expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.44 on revenues of $232.81 million, and for the current fiscal year, it is $1.85 on revenues of $942.76 million [7] - The estimate revisions trend for CarGurus is mixed, and future stock movements may depend on management's commentary during the earnings call [3][4] Industry Context - The Automotive - Replacement Parts industry, to which CarGurus belongs, is currently ranked in the top 15% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]

Financial Data and Key Metrics Changes - First quarter revenue was $225 million, up 4% year over year, slightly below the midpoint of guidance due to lower wholesale and product volumes [28] - Marketplace revenue was $212 million, up 13% year over year, driven by strength in subscription-based listings and OEM advertising revenue [28][29] - Non-GAAP gross profit was $200 million, up 14% year over year, with a non-GAAP gross margin of 89%, reflecting a shift towards high-margin Marketplace business [31][32] - Non-GAAP diluted earnings per share was $0.46, up 35% year over year, primarily due to increased adjusted EBITDA and lower diluted share count [35] Business Line Data and Key Metrics Changes - Marketplace revenue growth was driven by dealer count growth, subscription tier upgrades, and increased adoption of value-added products [9] - International revenue expanded 20% year over year, supported by traffic growth and lead growth in Canada and the UK [9][10] - Wholesale revenue was approximately $8 million, down 52% year over year, due to a decline in digital wholesale segment transaction volumes [31] Market Data and Key Metrics Changes - In Canada, 90% of surveyed dealers reported better ROI on CarGurus compared to alternative platforms, indicating strong market positioning [10] - CarGurus was the most downloaded auto app in Canada in Q1, contributing to an 85% year over year increase in direct traffic [10] - The company experienced a 20% year over year growth in direct traffic, reinforcing its position as the most visited listing site [21] Company Strategy and Development Direction - The company is focusing on "transformative innovation" in 2025, emphasizing customer-centric and AI-driven product development [6][7] - Strategic drivers include expanding data-driven solutions for dealers, enhancing the car shopping journey for consumers, and enabling more online transactions [7][8] - The company is assessing its wholesale business model to identify sustainable growth and profitability potential [26] Management's Comments on Operating Environment and Future Outlook - Management noted that while the market remains volatile, they have not seen a material impact on business related to tariffs [36] - The company anticipates exiting the year with low double-digit year-over-year growth rates, despite potential shifts in market conditions [36] - Management expressed confidence in the strength of their marketplace and the value of their insights capabilities amid market uncertainty [66] Other Important Information - The company added 734 paying U.S. dealers year over year, marking the highest dealer growth since pre-pandemic [29] - Digital Deal now accounts for over 25% of a dealer's email leads, indicating strong adoption and engagement [24] - The company ended the first quarter with $173 million in cash and cash equivalents, primarily impacted by share repurchases [35] Q&A Session Summary Question: Amazon's entry into the used vehicle market - Management acknowledged awareness of Amazon's activities but emphasized the complexity and trust required in the used vehicle market, which they believe is a strength for CarGurus [44] Question: OEM ad spending trends - Management expressed pride in Q1 results but acknowledged caution among OEMs due to tariffs, while maintaining a positive outlook on their advertising business [50] Question: Changes needed for CarOffer - Management discussed the need for operational efficiency and flexibility in the CarOffer platform to adapt to market volatility and improve profitability [53][55] Question: Revenue growth drivers - Management clarified that revenue growth is driven by both dealer count and revenue per dealer, with a significant increase in dealer additions this quarter [61] Question: Impact of tariffs on spending patterns - Management indicated that they have not seen a change in spending patterns due to tariffs, despite the prevailing uncertainty in the market [69]

Financial Data and Key Metrics Changes - First quarter revenue was $225 million, up 4% year over year, just below the midpoint of guidance range [28] - Marketplace revenue was $212 million for the first quarter, up 13% year over year, driven by strength in subscription-based listings revenue and OEM advertising revenue [28][30] - Non-GAAP gross profit was $200 million, up 14% year over year, with a non-GAAP gross margin of 89%, up approximately 720 basis points year over year [31] - Adjusted EBITDA was $66.3 million, up 32% year over year, with a margin of 29%, reflecting a favorable mix shift to high-margin Marketplace revenue [32] Business Line Data and Key Metrics Changes - Marketplace revenue grew 13% year over year, adding $25 million, driven by dealer count growth and increased adoption of value-added products [8] - International revenue expanded 20% year over year, supported by steady traffic growth and lead growth in Canada and the UK [8][10] - Wholesale revenue was about $8 million for the first quarter, down 52% year over year, driven by a 26% sequential decline in total digital wholesale segment transaction volumes [31] Market Data and Key Metrics Changes - In Canada, 90% of surveyed dealers reported better ROI on CarGurus compared to alternative platforms [9] - CarGurus was the most downloaded auto app in Canada in Q1, contributing to an 85% year over year increase in direct traffic [10] - The UK saw double-digit year over year lead growth, underpinned by an 82% year over year increase in direct traffic [10] Company Strategy and Development Direction - The company is focusing on three value creation drivers: expanding data-driven solutions for dealers, enhancing the car shopping journey for consumers, and enabling more online transactions [7] - The strategy for 2025 is termed the year of transformative innovation, heavily leveraging AI to open new avenues for product and platform growth [6] - The company is assessing its wholesale business model for sustainable growth and profitability potential [26] Management Comments on Operating Environment and Future Outlook - Management noted that while the market remains volatile, they have not seen a material impact on business related to tariffs [35] - The company anticipates exiting the year at a low double-digit year-over-year growth rate, despite potential shifts in market conditions [36] - Management emphasized the importance of continuing to invest in successful areas to maintain momentum and market share [77] Other Important Information - The company ended the first quarter with $173 million in cash and cash equivalents, a decrease driven by share repurchases and capital expenditures [34] - The first quarter marked a strong start to the year of transformative innovation, with solid financial results and measurable progress across strategic drivers [27] Q&A Session Summary Question: How does the company view Amazon's entry into the used vehicle market? - Management believes that while Amazon's entry into new vehicles is organized, the used vehicle market is more complex and less structured, which plays to CarGurus' strengths in dealer trust and integration [44][45] Question: What are the thoughts on OEM ad spending amidst tariff uncertainties? - Management expressed pride in the strong Q1 results for OEM advertising but acknowledged that manufacturers are cautious due to tariff uncertainties, which could impact future spending [50][51] Question: What changes are needed for the CarOffer platform to adapt to market volatility? - Management highlighted the need for operational efficiency and flexibility in the platform to better serve dealers and adapt to fluid pricing models [53][55]

Q1 2025 Earnings Presentation May 8, 2025 Cautionary Note Regarding Forward-Looking Statements This presentation includes forward-looking statements. Other than statements of historical facts, all statements contained in this presentation, including statements regarding our future financial and operating results; our second quarter 2025 financial and business performance, including guidance; our transformation to a transaction-enabled platform; our business and growth strategy and our plans to execute on ou ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________ to _________________ Commission File Number: 001-38233 CarGurus, Inc. (Exact Name of Registrant as Specified in its Charter) ...