Core Insights - CarGurus has launched a national brand campaign titled "Big Deal" to emphasize the significance of car shopping and the role of its digital tools in helping consumers find the best deals [1][2][3] Company Overview - CarGurus, Inc. (NASDAQ:CARG) is recognized as the fastest-growing automotive shopping site in Canada and operates online marketplaces in the U.K., Canada, and the U.S. [6][9] - The platform provides comprehensive vehicle history, unbiased deal ratings, and various tools to facilitate confident decision-making for buyers and sellers [2][6] Campaign Details - The "Big Deal" campaign aims to reflect the emotional weight of buying or selling a car, acknowledging it as a significant life decision [3] - The campaign will be promoted across TV networks, connected TV providers, and supplemented with digital and social media executions throughout the year [3] Tools and Features - CarGurus offers features such as an easy-to-use app, price drop alerts, and online financing options to enhance the car buying experience [2] - The platform also assists sellers with car pricing tools and the ability to receive instant offers for selling their vehicles online [2]

Core Insights - CarGurus has launched a national brand campaign titled "Big Deal" to emphasize the significance of car shopping and the role of its digital tools in helping consumers find the best deals [1][2][3] Company Overview - CarGurus, Inc. is the fastest-growing automotive shopping site in Canada, providing a platform for buying and selling vehicles with a focus on trust and transparency [6][7] - The company connects buyers to the best deals by offering complete vehicle history, unbiased deal ratings, and various digital tools to facilitate confident decision-making [2][6] Campaign Details - The "Big Deal" campaign aims to reflect the emotional weight of purchasing or selling a car, acknowledging it as a significant life decision [3] - The campaign will be promoted across TV networks, connected TV providers, and supplemented with digital and social media executions throughout the year [3] Tools and Features - CarGurus provides an easy-to-use app, price drop alerts, and online financing options to enhance the car buying experience [2] - The platform also offers car pricing tools for sellers and the ability to receive instant offers for selling vehicles online [2]

Group 1 - The Q4 earnings season has seen momentum stocks suffer significant declines even with minor earnings misses [1] - CarGurus, the largest online marketplace for used cars, experienced a substantial rebound rally prior to recent earnings reports [1] Group 2 - Gary Alexander has extensive experience in technology sectors, contributing insights that shape industry trends [1]

Company Overview - CarGurus, Inc. (CARG) is a global online automotive platform that connects buyers and sellers in the automotive market [1] Industry Position - CarGurus is recognized as the industry-leading listing marketplace, offering both digital retail solutions and the CarOffer online wholesale platform [1]

Financial Data and Key Metrics Changes - Full year marketplace revenue increased by 14% year-over-year, with revenue growth accelerating throughout the year [8] - Annual consolidated adjusted EBITDA grew by 26% year-over-year, reaching $51 million, with margins expanding over 600 basis points to nearly 28% [11] - Fourth quarter consolidated revenue was $229 million, up 2% year-over-year, driven by a 15% increase in marketplace revenue to $210 million [38][39] - Non-GAAP consolidated gross profit for Q4 was $199 million, up approximately 14% year-over-year, with a gross margin of 87% [42] Business Line Data and Key Metrics Changes - Marketplace business reported an annual consolidated adjusted EBITDA of $266 million, up 35% year-over-year [11] - Digital Wholesale segment ended the year with an $18 million adjusted EBITDA loss, reflecting declines in transaction volume [12] - Subscription-based listings revenue grew by $25 million year-over-year, reflecting new and existing dealers subscribing at Marketplace [38] Market Data and Key Metrics Changes - International business revenue increased by 23% year-over-year, with significant operating profit expansion [9] - Global accounts grew to 32,010 dealers, up 326 dealers sequentially, indicating market share growth [39] - OEM advertising business returned to double-digit year-over-year expansion, reflecting the replenishment of new car supply [10] Company Strategy and Development Direction - The company plans to continue investing in product innovations and enhancing the value proposition for dealers [13] - Focus on integrating offerings into dealers' daily workflows to strengthen market leadership [13] - Emphasis on rebuilding and integrating the Digital Wholesale segment, with a focus on improving operations and refining product market fit [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to replicate domestic success in international markets [9] - The company anticipates continued growth in the Marketplace segment, with guidance for Q1 2025 revenue growth between 12% and 14% year-over-year [49][78] - Management noted that dealers are currently in a wait-and-see mode regarding potential tariffs, focusing on normal operations [102] Other Important Information - The company ended Q4 with $304 million in cash and cash equivalents, an increase of $57 million from the previous quarter [47] - A $200 million share repurchase program was announced, effective January 2025 [48] Q&A Session Summary Question: Insights on Digital Deal and financing functionality - Management highlighted the pilot program for direct credit applications, which integrates with dealer financing systems to enhance consumer experience and lead conversion [58][59] Question: Impact of tariffs on the business - Management indicated that while tariffs could affect new car affordability, the immediate focus remains on operational performance and dealer engagement [62][63] Question: Drivers behind dealer additions and Marketplace revenue growth - Management attributed strong dealer additions to the company's reputation for delivering ROI and providing unique insights that enhance dealer profitability [70][72] Question: Consolidation of dealer spending towards high-yielding marketplaces - Management noted ongoing consolidation among dealers, with a trend towards focusing on fewer, high-yield partners [84][87] Question: Status of CarOffer platform turnaround - Management described the turnaround as being in early innings, with ongoing improvements in operations and product market fit [105][113] Question: Trends in OEM advertising and future expectations - Management expressed optimism about the OEM advertising business, citing strong audience growth and improved targeting capabilities [120][121] Question: Marketing strategy and channel preferences - Management indicated a shift towards online video and television marketing, moving away from traditional performance marketing [127][129] Question: Role of AI in enhancing customer experience - Management sees significant opportunities in AI applications to improve existing products and create new ones, enhancing dealer workflows [135]

Q4 2024 Earnings Presentation February 20, 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 transformation to a transaction-enabled platform; industry trends; our market and brand awareness; our business and growth strategy and our plans to execute on our growth strategy; our ability to grow our business profitably and ef ...

CarGurus, Inc. (NASDAQ:CARG) Q4 2024 Earnings Conference Call February 20, 2025 5:00 PM ET Company Participants Kirndeep Singh - Vice President and Head of Investor Relations Jason Trevisan - Chief Executive Officer Elisa Palazzo - Chief Financial Officer Sam Zales - President and Chief Operating Officer Conference Call Participants Vincent Kardos - Jefferies Ralph Schackart - William Blair Rajat Gupta - JPMorgan Marvin Fong - BTIG Ryan Powell - B. Riley Securities Nick Jones - Citizens JMP Chris Pierce - N ...

Core Viewpoint - CarGurus reported quarterly earnings of $0.55 per share, exceeding the Zacks Consensus Estimate of $0.50 per share, and showing an increase from $0.35 per share a year ago, indicating a 10% earnings surprise [1][2] Financial Performance - The company posted revenues of $228.54 million for the quarter ended December 2024, which was 0.79% below the Zacks Consensus Estimate, but an increase from $223.12 million year-over-year [2] - Over the last four quarters, CarGurus has surpassed consensus EPS estimates four times and topped revenue estimates twice [2] Stock Performance - CarGurus shares have increased approximately 4.4% since the beginning of the year, compared to a 4.5% gain in the S&P 500 [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.43 on revenues of $235.22 million, and for the current fiscal year, it is $1.90 on revenues of $977.58 million [7] - The trend of estimate revisions for CarGurus is mixed, which could change following the recent earnings report [6] Industry Context - The Automotive - Replacement Parts industry, to which CarGurus belongs, is currently ranked in the top 36% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Revenue and Financial Performance - Revenue decreased to $894.4 million for the year ended December 31, 2024, from $914.2 million for the year ended December 31, 2023, representing a 2% decrease[125]. - For the year ended December 31, 2024, the company recognized revenue of $894.4 million, a decrease from $914.2 million in 2023, representing a decline of approximately 2.9%[377][385]. - The marketplace revenue increased to $796.6 million in 2024 from $698.2 million in 2023, reflecting a growth of about 14.1%[385]. - The total cost of revenue decreased to $155.4 million in 2024 from $262.8 million in 2023, resulting in a gross profit of $738.9 million, up from $651.5 million[385]. - Operating expenses increased to $725.5 million in 2024 from $618.8 million in 2023, primarily due to a $134.5 million impairment charge[385]. - Consolidated net income for 2024 was $20.97 million, a slight decrease from $22.05 million in 2023[387]. - The company reported a basic net income per share of $0.20 for 2024, down from $0.27 in 2023[385]. - Total assets decreased to $824.5 million as of December 31, 2024, from $918.9 million in 2023, a decline of approximately 10.3%[384]. - Total liabilities decreased to $282.8 million in 2024 from $302.1 million in 2023, indicating a reduction of about 6.4%[384]. - Cash and cash equivalents increased to $304.2 million in 2024 from $291.4 million in 2023, showing a growth of approximately 4.8%[384]. - The company reported a net loss of $14,889,000 in 2024, compared to a net income of $36,942,000 in 2023[391]. Market and Economic Factors - Macroeconomic factors such as increased interest rates, inflation, and consumer confidence are critical drivers affecting vehicle sales and, consequently, the company's revenue[103]. - The company’s future revenue is uncertain due to potential macroeconomic effects, including inflation and changes in consumer confidence[126]. - The company expects fluctuations in revenue and results of operations due to macroeconomic factors, including increased interest rates and lower consumer confidence[193]. - The automotive industry faces challenges including dealership closures and consolidations, which could reduce demand for the company's products and services[97]. Operational Risks and Challenges - The company relies on subscription fees from dealers, with a significant risk if dealers terminate their agreements or if the number of paying dealers decreases[96]. - There is a risk of inventory challenges impacting the supply of vehicles available for sale, which could adversely affect revenue[110]. - The company may require additional capital to pursue business objectives, and failure to generate sufficient cash flows could adversely affect its financial condition[92]. - The company faces risks related to international operations, including competition from local providers and compliance with foreign laws and regulations[129]. - The company faces intense competition for retaining and attracting highly qualified personnel, which could materially affect its ability to grow[135]. - Any unplanned turnover of key personnel could disrupt the execution of the company's business plan and strategy[136]. - The company faces significant competition from various online automotive marketplaces and may struggle to maintain or grow the number of dealers subscribing to its services[188]. Technology and Data Management - The company relies on internet search engines to drive traffic to its websites, and any decline in search result rankings could adversely affect traffic and leads sent to dealers[120]. - The company must continually invest in product, technology, and development to improve marketplace attractiveness and adapt to changing consumer requirements[117]. - The company may experience interruptions in data access from third-party providers, which could negatively affect the shopping experience for consumers[121]. - The company relies on third-party service providers for critical operations, and any failure in these relationships could harm its business[148]. - Disruptions in the company's technology infrastructure could damage its reputation and result in a loss of consumers[150]. - Cybersecurity threats are increasing, and the company's disaster recovery plans may not effectively address all potential cyber risks, impacting brand reputation and consumer trust[156]. - The company relies on third-party service providers for the collection, processing, and storage of consumer data, which poses risks of data breaches and potential liabilities[153]. Compliance and Regulatory Issues - The company is subject to complex laws and regulations that could challenge its business model and result in significant penalties or damages[139]. - The Federal Trade Commission (FTC) has the authority to take actions against unfair or deceptive practices, which could lead to substantial costs for the company[142]. - The company is subject to numerous evolving privacy regulations, including the EU's General Data Protection Regulation and various U.S. state consumer privacy laws, which may require changes to its policies and procedures[158]. - Failure to comply with data protection laws could result in governmental investigations, regulatory fines, and damage to brand reputation, adversely affecting business operations[159]. Internal Controls and Governance - A previously identified material weakness in internal control over financial reporting could hinder the company's ability to accurately report financial conditions, affecting market perception[172]. - The company identified and remediated a material weakness in internal control over financial reporting during the year ended December 31, 2024[173]. - The company must maintain effective internal controls over financial reporting, and any failure could adversely affect investor confidence and stock value[192]. - The company's founder controls a majority of the voting power, which may conflict with the interests of other stockholders and affect corporate governance[180]. Strategic Initiatives and Future Outlook - The company completed the acquisition of CarOffer on December 1, 2023, which may impact operational efficiency and financial results if not successfully integrated[111]. - The company anticipates that future revenue growth will require a focus on developing new products that must be widely adopted by consumers and dealers[117]. - The company announced a share repurchase program with an aggregate purchase price not to exceed $200 million, effective January 1, 2025, and expiring December 31, 2025[185]. - Expectations regarding environmental, social, and governance (ESG) considerations may expose the company to potential liabilities and increased costs[177]. - The company may face reputational harm and legal proceedings if it fails to meet evolving stakeholder expectations regarding ESG initiatives[179].

Revenue Growth - Q4'24 Marketplace revenue grew 15% year-over-year to $210.2 million, while total revenue increased by 2% to $228.5 million[4] - Q4'24 International revenue rose 26% year-over-year, and OEM Advertising revenue also experienced double-digit growth[2] - Total revenue for Q4 2024 was $228.5 million, a slight increase from $223.1 million in Q4 2023, while total revenue for the year was $894.4 million, down from $914.2 million in 2023[25] - U.S. Marketplace revenue for Q4 2024 was $193.4 million, up from $168.9 million in Q4 2023, contributing to a yearly total of $733.7 million compared to $647.3 million in 2023[27] Profitability Metrics - Q4'24 Non-GAAP Consolidated Adjusted EBITDA reached $76.4 million, up 25% year-over-year, with a margin of 33%[4] - The company recorded a GAAP Consolidated Net Income of $45.9 million in Q4'24, reflecting a 5% decrease year-over-year[4] - Consolidated net income for Q4 2024 was $45,881 thousand, compared to a loss of $22,603 thousand in Q4 2023[30] - Non-GAAP consolidated net income for Q4 2024 was $58,700 thousand, up from $38,761 thousand in Q4 2023, representing a 51% increase[31] - The company reported a net income per share of $0.44 for Q4 2024, compared to a loss of $0.21 per share in Q4 2023[25] Operating Expenses - Operating expenses decreased to $145.7 million in Q4 2024 from $190.3 million in Q4 2023, primarily due to lower general and administrative costs[25] - The company recorded a $134.5 million impairment-related charge in operating expenses for the year ended December 31, 2024[5] - The total cost of revenue and operating expenses for the year ended December 31, 2024, was $668.858 million, down from $736.869 million in 2023, showing a reduction of approximately 9.2%[38] Cash Flow - Cash provided by operating activities for Q4 2024 was $75,737 thousand, significantly higher than $2,496 thousand in Q4 2023[30] - For the year ended December 31, 2024, GAAP net cash provided by operating activities was $255,494,000, up from $124,527,000 in 2023[40] - Non-GAAP free cash flow for Q4 2024 was $62,039,000, a recovery from a negative $17,894,000 in Q4 2023[40] - Non-GAAP free cash flow for the year ended December 31, 2024 was $161,545,000, compared to $83,316,000 in 2023, indicating strong growth[40] User Engagement - U.S. Average Monthly Unique Users decreased by 5% to 29.3 million, while International Average Monthly Unique Users also fell by 5% to 9.1 million[7] - Monthly unique users and sessions are critical metrics for assessing user engagement and marketplace effectiveness, with a shift to GA4 methodology effective July 1, 2024[53][54][55] - The company emphasizes the importance of measuring unique users and sessions to understand consumer satisfaction and engagement, which directly impacts marketplace revenue[55] Dealer Metrics - The number of U.S. Paying Dealers increased by 2% to 24,692, while International Paying Dealers grew by 11% to 7,318[7] - The number of paying dealers is a key metric, reflecting the value proposition of marketplace products and sales success[50] - Quarterly Average Revenue per Subscribing Dealer (QARSD) is calculated based on marketplace revenue from subscriptions divided by the average number of paying dealers, indicating product value and return on investment[51] Financial Health - The total assets decreased to $824.5 million as of December 31, 2024, from $918.9 million in 2023, reflecting a reduction in goodwill and intangible assets[24] - Total liabilities decreased to $282.8 million as of December 31, 2024, down from $302.1 million in 2023, indicating improved financial health[24] Future Outlook - For Q1 2025, CarGurus expects total revenue between $216 million and $236 million, with Marketplace revenue projected at $209 million to $214 million[11] - The company plans to continue focusing on market expansion and new product development to drive future growth and profitability[39]