Core Insights - CarGurus reported Q2 2025 GAAP revenue of $234.0 million, slightly exceeding analyst estimates of $232.7 million, with non-GAAP earnings per share of $0.57, surpassing expectations [1][2] - The company announced the winding down of its CarOffer transactions business due to underperformance, refocusing on its core Marketplace platform and data-driven dealer solutions [1][7] Financial Performance - Non-GAAP EPS increased by 46.2% year-over-year to $0.57, while GAAP revenue rose by 7% compared to Q2 2024 [2] - Gross profit (GAAP) reached $204.4 million, a 12.1% increase from the previous year, with gross margin improving to 87% [2][8] - Non-GAAP adjusted EBITDA grew by 39% to $77.3 million, reflecting a 33% margin, up from 25% in Q2 2024 [2][8] - Free cash flow (non-GAAP) surged by 61.6% year-over-year to $65.3 million [2][8] Business Segments - The Marketplace business generated $222.0 million in revenue, a 14% increase year-over-year, with operating income for the U.S. segment rising 40% to $58.8 million [5] - The number of U.S. paying dealers increased by 4% to 25,478, while international paying dealers grew by 10% to 7,617 [5][6] - The Digital Wholesale segment, primarily from CarOffer, saw a 49% revenue decline to $12.0 million, with transaction volumes dropping 55% [7] Strategic Focus - CarGurus is prioritizing technological innovation, particularly in AI and analytics tools to enhance dealer workflow and consumer experience [4] - The company plans to retain and expand its AI-powered dealer analytics and inventory intelligence offerings while improving core Marketplace functionalities [10] Market Outlook - For Q3 2025, management projects Marketplace revenue between $228–$233 million and non-GAAP EPS of $0.50–$0.58 [12] - Transition costs related to the CarOffer wind-down are expected to be between $14.0–19.0 million, primarily in the second half of 2025 [12] - The company emphasizes its competitive edge in data, technology, and dealer relationships amid increasing competition from other online auto platforms [11]

Financial Performance - Q2 2025 - Revenue for U S Marketplace & Other increased by 13 7% year-over-year, reaching $222 million[10] - Non-GAAP Gross Profit for U S Marketplace & Other was $206 4 million, with a margin of 93%[10] - Non-GAAP Adjusted EBITDA for U S Marketplace & Other grew by 30 8% year-over-year to $80 1 million, resulting in a 36% margin[10] - Digital Wholesale revenue was $12 million[10], with a Non-GAAP Gross Profit of $0 9 million and a Non-GAAP margin of 7%[10] - The company's Non-GAAP Adjusted EBITDA was $77 3 million, representing a 33% margin[10] Key Business Updates - Digital Deal adoption reached approximately 12,000 dealers, with Digital Deal Leads accounting for over 27% of email leads[15] - Max Margin adoption increased by approximately 70% quarter-over-quarter, while Merchandising Health grew by approximately 30% quarter-over-quarter[17] - Daily active users of the core dealer app functionality increased by 71% year-over-year[17] Dealer Base Growth - The U S paying dealer base grew by 8 5% year-over-year, an increase of 1,743 dealers[19] - The international paying dealer base increased by 19 3% year-over-year[19] - Average Quarterly Revenue per Subscribing Dealer (QARSD) in the U S increased to $7,533, while international QARSD reached $2,309[19] Q3 2025 Guidance - Marketplace Revenue is projected to be between $228 million and $233 million[38] - Non-GAAP Marketplace Adjusted EBITDA is expected to range from $76 5 million to $84 5 million[33]

PART I—FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements.) This section presents CarGurus, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, income statements, cash flows, and detailed accounting notes [Unaudited Condensed Consolidated Balance Sheets](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) This section presents the Company's financial position, detailing assets, liabilities, and equity at specific dates | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | **Assets** | | | | Cash and cash equivalents | $231,233 | $304,193 | | Total current assets | $308,972 | $391,206 | | Total assets | $726,121 | $824,536 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $97,199 | $93,051 | | Total liabilities | $290,644 | $282,847 | | Total stockholders' equity | $435,477 | $541,689 | - Total assets decreased by **$98.4 million** from December 31, 2024, to June 30, 2025, primarily driven by a decrease in cash and cash equivalents[13](index=13&type=chunk) [Unaudited Condensed Consolidated Income Statements](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Income%20Statements) This section presents the Company's financial performance, detailing revenues, expenses, and net income (loss) for specified periods | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :---------------------------------- | :------------------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Total revenue | $234,033 | $218,692 | $459,191 | $434,488 | | Total cost of revenue | $29,651 | $36,248 | $55,102 | $77,083 | | Gross profit | $204,382 | $182,444 | $404,089 | $357,405 | | Total operating expenses | $179,538 | $276,028 | $333,490 | $424,705 | | Income (loss) from operations | $24,844 | $(93,584) | $70,599 | $(67,300) | | Net income (loss) | $22,343 | $(68,721) | $61,388 | $(47,420) | | Basic EPS | $0.23 | $(0.66) | $0.61 | $(0.45) | | Diluted EPS | $0.22 | $(0.66) | $0.60 | $(0.45) | - Net income significantly improved for both the three and six months ended June 30, 2025, compared to the prior year, moving from a net loss to positive net income, largely driven by a substantial decrease in impairment expenses[14](index=14&type=chunk) [Unaudited Condensed Consolidated Statements of Comprehensive Income](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the Company's comprehensive income (loss), including net income and other comprehensive income items for specified periods | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Net income (loss) | $22,343 | $(68,721) | $61,388 | $(47,420) | | Foreign currency translation adjustment | $2,679 | $(203) | $3,917 | $(802) | | Comprehensive income (loss) | $25,022 | $(68,924) | $65,305 | $(48,222) | - Comprehensive income turned positive in 2025, primarily due to the shift from net loss to net income and a positive foreign currency translation adjustment, contrasting with a loss in 2024[16](index=16&type=chunk) [Unaudited Condensed Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section details changes in the Company's stockholders' equity, including common stock, retained earnings, and comprehensive income for specified periods | Metric | As of June 30, 2025 (in thousands) | As of December 31, 2024 (in thousands) | | :-------------------------------- | :--------------------------------- | :----------------------------------- | | Total stockholders' equity | $435,477 | $541,689 | | Class A common stock shares outstanding | 84,738,943 | 89,002,571 | | Class B common stock shares outstanding | 14,216,250 | 14,986,745 | | Retained earnings | $418,642 | $375,119 | | Accumulated other comprehensive income (loss) | $1,370 | $(2,547) | - Total stockholders' equity decreased by **$106.2 million** from December 31, 2024, to June 30, 2025, primarily due to significant common stock repurchases (**$185.9 million**) and a decrease in additional paid-in capital, partially offset by net income and positive foreign currency translation adjustments[18](index=18&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the Company's cash inflows and outflows from operating, investing, and financing activities for specified periods | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Net cash provided by operating activities | $140,998 | $123,561 | | Net cash used in investing activities | $(15,476) | $(44,373) | | Net cash used in financing activities | $(200,537) | $(153,975) | | Net decrease in cash, cash equivalents, and restricted cash | $(72,880) | $(75,561) | | Cash, cash equivalents, and restricted cash at end of period | $233,349 | $218,365 | - Net cash provided by operating activities increased by **$17.4 million** YoY for the six months ended June 30, 2025. Net cash used in financing activities increased significantly due to higher common stock repurchases[21](index=21&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements, covering accounting policies, revenue, impairments, and debt [1. Organization and Business Description](index=11&type=section&id=1.%20Organization%20and%20Business%20Description) CarGurus, Inc. operates as a multinational online automotive platform, winding down CarOffer's transaction business to focus on AI-powered inventory intelligence - CarGurus is winding down its CarOffer Transactions Business (Dealer-to-Dealer and Instant Max Cash Offer products) due to its ineffectiveness in a volatile pricing environment, shifting focus to AI-powered inventory intelligence and consumer vehicle sourcing via 'Sell My Car - Top Dealer Offers'[23](index=23&type=chunk)[134](index=134&type=chunk) - The Company operates in the U.S. (CarGurus, Autolist, CarOffer), Canada (CarGurus), and the U.K. (CarGurus, PistonHeads), with two reportable segments: U.S. Marketplace and Digital Wholesale[24](index=24&type=chunk)[25](index=25&type=chunk) [2. Summary of Significant Accounting Policies](index=11&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) The unaudited financial statements conform to GAAP, with critical accounting estimates covering revenue recognition, asset impairment, and intangible asset valuation, including a Q2 2025 CarOffer impairment - The Company's critical accounting estimates involve sales allowance and variable consideration in revenue recognition, impairment and useful lives of long-lived assets, capitalization and useful lives of product, technology, and development costs, and valuation/recoverability of intangible assets and goodwill[34](index=34&type=chunk) - An interim impairment test for the CarOffer reporting unit was triggered in Q2 2025 due to sustained low transaction volume and delayed growth, resulting in a **full impairment of goodwill** and partial impairment of other long-lived assets[35](index=35&type=chunk)[61](index=61&type=chunk) - New accounting pronouncements, ASU 2024-03 (Expense Disaggregation Disclosures) and ASU 2023-09 (Income Tax Disclosures), are being evaluated for their impact on future consolidated financial statements[45](index=45&type=chunk)[46](index=46&type=chunk) [3. Revenue Recognition](index=14&type=section&id=3.%20Revenue%20Recognition) Revenue is disaggregated by marketplace, Dealer-to-Dealer, and IMCO services; marketplace revenue increased significantly, while Dealer-to-Dealer and IMCO revenues decreased in 2025 | Revenue Source | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Marketplace | $221,998 | $195,167 | $434,233 | $382,386 | | Dealer-to-Dealer | $7,682 | $15,492 | $15,847 | $33,991 | | Sell My Car - Instant Max Cash Offer | $4,353 | $8,033 | $9,111 | $18,111 | | Total | $234,033 | $218,692 | $459,191 | $434,488 | - Marketplace revenue increased by **13.7%** for the three months and **13.6%** for the six months ended June 30, 2025, compared to the same periods in 2024[47](index=47&type=chunk) - Dealer-to-Dealer and IMCO revenues both decreased by approximately **50%** for both the three and six months ended June 30, 2025, compared to the same periods in 2024[47](index=47&type=chunk) [4. Fair Value of Financial Instruments](index=15&type=section&id=4.%20Fair%20Value%20of%20Financial%20Instruments) The Company's recurring fair value assets primarily consist of cash equivalents in mutual funds, categorized as Level 1 inputs | Asset Type | As of June 30, 2025 (in thousands) | As of December 31, 2024 (in thousands) | | :----------- | :--------------------------------- | :----------------------------------- | | Mutual funds | $47,396 | $165,074 | | Total | $47,396 | $165,074 | - Cash equivalents in mutual funds decreased significantly from **$165.1 million** at December 31, 2024, to **$47.4 million** at June 30, 2025[55](index=55&type=chunk) [5. Property and Equipment, Net](index=16&type=section&id=5.%20Property%20and%20Equipment%2C%20Net) Property and equipment, net, remained stable, with capitalized software additions offset by write-offs and CarOffer-related impairments | Category | As of June 30, 2025 (in thousands) | As of December 31, 2024 (in thousands) | | :-------------------------- | :--------------------------------- | :----------------------------------- | | Capitalized internal-use software | $20,404 | $20,060 | | Capitalized website development | $53,276 | $56,877 | | Leasehold improvements | $85,890 | $95,691 | | Total Property and equipment, net | $130,299 | $130,010 | - Capitalized internal-use software increased by **$344k**, primarily due to **$3.3 million** in additions, partially offset by **$2.2 million** in write-offs of fully depreciated Digital Wholesale assets and **$769k** in impairments[56](index=56&type=chunk) - Capitalized website development costs decreased by **$3.6 million**, mainly due to **$13.4 million** in write-offs of fully depreciated Digital Wholesale assets and **$4.8 million** in impairments, offset by **$14.6 million** in additions[57](index=57&type=chunk) [6. Impairments](index=16&type=section&id=6.%20Impairments) The Company recognized a **$32.6 million** impairment for the CarOffer reporting unit in Q2 2025, including **$19.6 million** in goodwill, due to low transaction volume and delayed growth - A triggering event in Q2 2025 led to a **$32.6 million** impairment for the CarOffer reporting unit, including a **full impairment of goodwill ($19.6 million)** and partial impairments of other long-lived assets[61](index=61&type=chunk)[65](index=65&type=chunk)[85](index=85&type=chunk) | Impairment Type | Three Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | | :-------------------------------- | :------------------------------------------ | :---------------------------------------- | | Capitalized website development (Cost of Revenue) | $2,919 | $2,919 | | Capitalized hosting arrangements (Operating Expense) | $291 | $291 | | Capitalized internal-use software (Operating Expense) | $769 | $769 | | Capitalized website development (Operating Expense) | $1,882 | $1,882 | | Intangible assets (Operating Expense) | $6,624 | $6,624 | | Goodwill (Operating Expense) | $19,568 | $19,568 | | Right-of-use assets (Operating Expense) | $499 | $499 | | Total Impairments | $32,552 | $32,552 | - The impairment charge reduced the carrying value of CarOffer reporting unit goodwill to **zero**[85](index=85&type=chunk) [7. Accrued Expenses, Accrued Income Taxes, and Other Current Liabilities](index=21&type=section&id=7.%20Accrued%20Expenses%2C%20Accrued%20Income%20Taxes%2C%20and%20Other%20Current%20Liabilities) Accrued expenses, income taxes, and other current liabilities decreased by **$4.1 million** due to 2024 bonus payouts, partially offset by new accruals | Category | As of June 30, 2025 (in thousands) | As of December 31, 2024 (in thousands) | | :---------------------------------------------------- | :--------------------------------- | :----------------------------------- | | Accrued bonus | $11,159 | $17,377 | | Accrued commissions | $5,244 | $4,818 | | Other accrued expenses, accrued income taxes, and other current liabilities | $15,490 | $13,780 | | Total | $31,893 | $35,975 | - Accrued bonus decreased by **$6.2 million**, mainly due to the payout of the remaining 2024 bonus, partially offset by new accruals[88](index=88&type=chunk) [8. Debt](index=21&type=section&id=8.%20Debt) The Company had no long-term debt as of June 30, 2025, maintaining a **$400.0 million** revolving credit facility with **$390.6 million** available capacity - No long-term debt outstanding as of June 30, 2025[89](index=89&type=chunk) - The 2022 Revolver provides **$400.0 million** in borrowing capacity, with **$9.4 million** in letters of credit outstanding as of June 30, 2025, reducing available capacity to **$390.6 million**[90](index=90&type=chunk)[93](index=93&type=chunk) - The Company was in compliance with all covenants of the Credit Agreement as of June 30, 2025[92](index=92&type=chunk) [9. Commitments and Contingencies](index=22&type=section&id=9.%20Commitments%20and%20Contingencies) The Company's commitments include letters of credit and restricted cash, with no pending litigation expected to have a material adverse effect - As of June 30, 2025, **$9.4 million** in letters of credit were outstanding, associated with the Company's leases[98](index=98&type=chunk) - Restricted cash amounted to **$2.1 million** as of June 30, 2025, related to pass-through payments from dealers in the Digital Wholesale business[99](index=99&type=chunk) - The Company is not currently subject to any pending or threatened litigation expected to have a material adverse effect on its business or financial results[101](index=101&type=chunk) [10. Stock-based Compensation and Common Stock Share Repurchases](index=23&type=section&id=10.%20Stock-based%20Compensation%20and%20Common%20Stock%20Share%20Repurchases) Stock-based compensation expense decreased in 2025, and the 2025 Share Repurchase Program was increased to **$350.0 million**, with **$184.5 million** repurchased in H1 2025 | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------- | :------------------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Stock options | $65 | $555 | $136 | $1,146 | | Restricted stock units | $12,960 | $15,002 | $25,789 | $30,233 | | Total stock-based compensation expense | $13,025 | $15,557 | $25,925 | $31,379 | - Stock-based compensation expense decreased by **$2.5 million (16.3%)** for the three months and **$5.5 million (17.4%)** for the six months ended June 30, 2025, compared to the prior year[102](index=102&type=chunk) - The 2025 Share Repurchase Program was amended to increase authorization by **$150.0 million** to a total of **$350.0 million** and extended to July 31, 2026. During the six months ended June 30, 2025, the Company repurchased **5,930,439 shares** for **$184.5 million**[103](index=103&type=chunk)[106](index=106&type=chunk)[137](index=137&type=chunk) [11. Earnings Per Share](index=24&type=section&id=11.%20Earnings%20Per%20Share) Basic and diluted net income per share improved significantly in 2025, turning positive from prior year losses, with equivalent EPS for Class A and B common stock | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $22,343 | $(68,721) | $61,388 | $(47,420) | | Basic EPS | $0.23 | $(0.66) | $0.61 | $(0.45) | | Diluted EPS | $0.22 | $(0.66) | $0.60 | $(0.45) | | Basic weighted-average shares | 98,889,893 | 103,827,661 | 100,980,676 | 105,501,236 | | Diluted weighted-average shares | 100,184,067 | 103,827,661 | 102,614,441 | 105,501,236 | - Basic and diluted EPS turned positive in 2025, reflecting a significant improvement from losses in 2024, primarily due to increased net income[112](index=112&type=chunk) - Weighted-average shares outstanding decreased in 2025 compared to 2024, partly due to common stock repurchases[112](index=112&type=chunk) [12. Income Taxes](index=25&type=section&id=12.%20Income%20Taxes) The Company recognized an income tax provision in 2025 due to profitability, with effective tax rates lower than statutory, and the OBBBA is expected to provide material cash tax savings | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Provision for (benefit from) income taxes | $5,065 | $(21,702) | $14,571 | $(13,318) | | Effective tax rate | 18.5% | 24.0% | 19.2% | 21.9% | - The effective tax rate for Q2 2025 (**18.5%**) and YTD 2025 (**19.2%**) was lower than the statutory **21%** due to windfall tax benefits and R&D tax credits, partially offset by state/local taxes and executive compensation limitations[114](index=114&type=chunk) - The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, is expected to result in **material cash tax savings** over the next several years due to provisions like accelerated cost recovery and immediate R&D expensing[116](index=116&type=chunk)[200](index=200&type=chunk) [13. Segment and Geographic Information](index=26&type=section&id=13.%20Segment%20and%20Geographic%20Information) The Company operates U.S. Marketplace and Digital Wholesale segments; U.S. Marketplace revenue and income increased, while Digital Wholesale declined due to the CarOffer wind-down | Segment Revenue | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :---------------- | :------------------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | U.S. Marketplace | $202,652 | $180,052 | $397,880 | $353,040 | | Digital Wholesale | $12,035 | $23,525 | $24,958 | $52,102 | | Other | $19,346 | $15,115 | $36,353 | $29,346 | | Total | $234,033 | $218,692 | $459,191 | $434,488 | | Segment Income (Loss) from Operations | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :------------------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | U.S. Marketplace | $58,762 | $42,043 | $108,543 | $76,260 | | Digital Wholesale | $(37,041) | $(138,158) | $(42,820) | $(148,498) | | Other | $3,123 | $2,531 | $4,876 | $4,938 | | Total | $24,844 | $(93,584) | $70,599 | $(67,300) | - U.S. Marketplace revenue increased **13%** for both the three and six months ended June 30, 2025, while Digital Wholesale revenue decreased **49%** and **52%** respectively, reflecting the impact of the CarOffer wind-down[122](index=122&type=chunk)[125](index=125&type=chunk)[128](index=128&type=chunk)[130](index=130&type=chunk) [14. Subsequent Events](index=31&type=section&id=14.%20Subsequent%20Events) The Board decided to wind down CarOffer Transactions Business, expecting **$14.0 million to $19.0 million** in expenditures, and increased the 2025 Share Repurchase Program to **$350.0 million** - CarGurus will wind down the CarOffer Transactions Business, focusing on AI-powered inventory intelligence and consumer vehicle sourcing through 'Sell My Car - Top Dealer Offers'[134](index=134&type=chunk) - The wind-down is expected to incur total expenditures of **$14.0 million to $19.0 million**, mostly in H2 2025, with remaining payments in H1 2026[135](index=135&type=chunk) - The 2025 Share Repurchase Program was increased by **$150.0 million** to **$350.0 million** and extended to July 31, 2026. As of August 7, 2025, **$165.5 million** remained authorized for repurchase[137](index=137&type=chunk)[138](index=138&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of financial condition and results, highlighting the CarOffer wind-down, key metrics, revenue, expenses, segment performance, liquidity, and critical accounting estimates [Company Overview](index=33&type=section&id=Company%20Overview) CarGurus is a multinational online automotive platform leveraging technology for vehicle transactions, operating across U.S., U.K., and Canada, with U.S. Marketplace and Digital Wholesale segments - CarGurus is an online automotive platform using proprietary technology, search algorithms, and data analytics to provide trust, transparency, and competitive pricing for vehicle shopping[142](index=142&type=chunk) - The Company operates CarGurus, Autolist, and PistonHeads brands, with CarOffer as a subsidiary, and has two reportable segments: U.S. Marketplace and Digital Wholesale[143](index=143&type=chunk)[144](index=144&type=chunk) | Metric | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :------------- | :----------------------------------------- | :----------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Revenue | $234.0 | $218.7 | $459.2 | $434.5 | | Net income (loss) | $22.3 | $(68.7) | $61.4 | $(47.4) | | Adjusted EBITDA | $77.3 | $55.6 | $143.6 | $106.0 | [Wind Down of CarOffer](index=34&type=section&id=Wind%20Down%20of%20CarOffer) CarGurus' Board decided to wind down the CarOffer Transactions Business due to market ineffectiveness, pivoting to AI-powered inventory intelligence, with **$14.0 million to $19.0 million** in expected expenditures - The CarOffer Transactions Business is being wound down as it proved less effective in a volatile pricing environment, with dealers requiring more flexibility and automation[149](index=149&type=chunk) - The Company will focus on AI-powered inventory intelligence and consumer vehicle sourcing through 'Top Dealer Offers' instead of facilitating transactions[149](index=149&type=chunk) - Wind-down activities are expected to be substantially completed in H2 2025, incurring **$14.0 million to $19.0 million** in expenditures, mostly in H2 2025 and H1 2026[150](index=150&type=chunk) [Key Business Metrics](index=35&type=section&id=Key%20Business%20Metrics) CarGurus monitors key metrics including unique users, sessions, paying dealers, transactions, and QARSD; GA4 adoption affects user/session comparisons, and Digital Wholesale transactions will cease | Metric | Three Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | | :-------------------------- | :------------------------------------------ | :---------------------------------------- | | Average Monthly Unique Users (Total) | 44,294 | 44,969 | | Average Monthly Sessions (Total) | 105,895 | 106,919 | - Due to the transition to Google Analytics 4 (GA4) effective July 1, 2024, comparable monthly unique user and session data for periods prior to June 30, 2024, is unavailable[153](index=153&type=chunk)[155](index=155&type=chunk)[157](index=157&type=chunk) | Metric | As of June 30, 2025 | As of June 30, 2024 | | :-------------------------- | :------------------ | :------------------ | | Number of Paying Dealers (Total) | 33,095 | 31,352 | | U.S. QARSD | $7,533 | $6,942 | | International QARSD | $2,309 | $1,935 | | Consolidated QARSD | $6,349 | $5,848 | | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Transactions | 3,955 | 8,778 | 9,164 | 19,080 | - Transactions in the Digital Wholesale segment decreased by **55%** for the three months and **52%** for the six months ended June 30, 2025, compared to the prior year, and are expected to cease over time due to the CarOffer wind-down[160](index=160&type=chunk)[161](index=161&type=chunk) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------- | :------------------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Adjusted EBITDA | $77,296 | $55,556 | $143,592 | $105,954 | - Adjusted EBITDA increased by **39.1%** for the three months and **35.5%** for the six months ended June 30, 2025, compared to the prior year, indicating improved operating performance[170](index=170&type=chunk) [Components of Unaudited Condensed Consolidated Income Statements](index=40&type=section&id=Components%20of%20Unaudited%20Condensed%20Consolidated%20Income%20Statements) This section details the Company's revenue streams, cost of revenue, and operating expenses, explaining their composition, generation, and influencing factors - Marketplace revenue is primarily derived from dealer subscriptions (Listings, RPM, Digital Retail, Top Dealer Offers), advertising from auto manufacturers, and partnerships with financing companies[171](index=171&type=chunk)[172](index=172&type=chunk)[175](index=175&type=chunk)[177](index=177&type=chunk)[178](index=178&type=chunk)[181](index=181&type=chunk) - Wholesale revenue comes from transaction fees on Dealer-to-Dealer and other marketplace vehicle sales, as well as inspection and transportation services. Product revenue is from the sale of vehicles acquired through IMCO transactions and arbitration[171](index=171&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk)[185](index=185&type=chunk) - Cost of revenue includes expenses for supporting marketplace services, vehicle transportation/inspection, net losses on guarantees, and personnel for Digital Wholesale transactions. Product cost of revenue includes vehicle cost and transportation for IMCO and arbitration sales[187](index=187&type=chunk)[189](index=189&type=chunk)[191](index=191&type=chunk) - Operating expenses include sales and marketing (personnel, advertising), product/technology/development (R&D personnel, software), general and administrative (executive, finance, legal, professional fees), impairments (CarOffer reporting unit), and depreciation/amortization[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk)[197](index=197&type=chunk) [Results of Operations](index=44&type=section&id=Results%20of%20Operations) The Company experienced **7%** Q2 and **6%** YTD revenue growth driven by marketplace, offset by Digital Wholesale decline; net income improved substantially from lower impairment expenses | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change Amount (in thousands) | Change % | | :-------------------------- | :------------------------------------------ | :------------------------------------------ | :--------------------------- | :------- | | Marketplace Revenue | $221,998 | $195,167 | $26,831 | 14% | | Wholesale Revenue | $6,275 | $13,119 | $(6,844) | (52)% | | Product Revenue | $5,760 | $10,406 | $(4,646) | (45)% | | Total Revenue | $234,033 | $218,692 | $15,341 | 7% | | Total Cost of Revenue | $29,651 | $36,248 | $(6,597) | (18)% | | Impairments | $29,633 | $127,475 | $(97,842) | (77)% | | Net Income (Loss) | $22,343 | $(68,721) | $91,064 | NM | | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change Amount (in thousands) | Change % | | :-------------------------- | :------------------------------------------ | :------------------------------------------ | :--------------------------- | :------- | | Marketplace Revenue | $434,233 | $382,386 | $51,847 | 14% | | Wholesale Revenue | $14,022 | $29,244 | $(15,222) | (52)% | | Product Revenue | $10,936 | $22,858 | $(11,922) | (52)% | | Total Revenue | $459,191 | $434,488 | $24,703 | 6% | | Total Cost of Revenue | $55,102 | $77,083 | $(21,981) | (29)% | | Impairments | $29,633 | $127,475 | $(97,842) | (77)% | | Net Income (Loss) | $61,388 | $(47,420) | $108,808 | NM | - Marketplace revenue growth was driven by increases in paying dealer count, QARSD, and advertising spend. Digital Wholesale revenue decline was primarily due to a **55%** decrease in Transactions for Q2 2025 and **52%** for YTD 2025[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk) - U.S. Marketplace segment income from operations increased by **40%** for Q2 2025 and **42%** for YTD 2025. Digital Wholesale segment loss from operations decreased by **73%** for Q2 2025 and **71%** for YTD 2025, primarily due to lower impairment charges compared to the prior year[223](index=223&type=chunk)[224](index=224&type=chunk)[244](index=244&type=chunk)[246](index=246&type=chunk) [Liquidity and Capital Resources](index=57&type=section&id=Liquidity%20and%20Capital%20Resources) The Company's liquidity stems from **$231.2 million** cash and **$390.6 million** available credit; operating activities generated **$141.0 million** in H1 2025, while financing used **$200.5 million** due to repurchases - As of June 30, 2025, the Company had **$231.2 million** in cash and cash equivalents and **$390.6 million** in available borrowing capacity under its **$400.0 million** revolving credit facility[247](index=247&type=chunk)[250](index=250&type=chunk) | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net cash provided by operating activities | $140,998 | $123,561 | | Net cash used in investing activities | $(15,476) | $(44,373) | | Net cash used in financing activities | $(200,537) | $(153,975) | | Net decrease in cash, cash equivalents, and restricted cash | $(72,880) | $(75,561) | - Net cash used in financing activities increased by **$46.6 million** YoY, primarily due to **$184.6 million** in common stock repurchases in H1 2025[261](index=261&type=chunk) - The wind-down of CarOffer is expected to incur **$14.0 million to $19.0 million** in expenditures, impacting future liquidity[255](index=255&type=chunk) [Critical Accounting Estimates](index=61&type=section&id=Critical%20Accounting%20Estimates) The Company's critical accounting estimates involve revenue recognition, asset impairment, development cost capitalization, and intangible asset valuation, with a Q2 2025 CarOffer impairment charge - Critical accounting estimates include sales allowance, variable consideration in revenue recognition, impairment and useful lives of long-lived assets, capitalization of website development, internal-use software, and hosting arrangements, and valuation/recoverability of intangible assets and goodwill[271](index=271&type=chunk) - An interim impairment test for the CarOffer reporting unit in Q2 2025, triggered by low transaction volume and delayed growth, resulted in a partial impairment charge[272](index=272&type=chunk) [Recently Issued Accounting Pronouncements](index=61&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) Details on recently issued accounting pronouncements are provided in Note 2 of the Unaudited Condensed Consolidated Financial Statements - Refer to Note 2 for details on recently issued accounting pronouncements, including ASU 2024-03 (Expense Disaggregation Disclosures) and ASU 2023-09 (Income Tax Disclosures), which the Company is currently evaluating[274](index=274&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Company is exposed to market risks from interest rates, inflation, and foreign currency exchange rates; past impacts have been immaterial, but these risks are continuously monitored - The Company's primary market risks are interest rate risk (related to its **$400.0 million** revolving credit facility and cash equivalents), inflation risk, and foreign currency exchange risk (British pound, Euro, Canadian dollar)[276](index=276&type=chunk)[277](index=277&type=chunk)[278](index=278&type=chunk)[282](index=282&type=chunk) - Interest rate fluctuations and foreign currency exchange rate changes have not had a material effect on the Company's business, financial condition, or results of operations for the periods presented[279](index=279&type=chunk)[282](index=282&type=chunk) - Inflation has not materially affected the business, but potential future inflationary pressures could impact costs and vehicle purchasing behavior[281](index=281&type=chunk) [Item 4. Controls and Procedures](index=63&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the period - Disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level as of June 30, 2025[283](index=283&type=chunk)[284](index=284&type=chunk) - No material changes in internal control over financial reporting occurred during the period covered by the Quarterly Report[285](index=285&type=chunk) [PART II. OTHER INFORMATION](index=64&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section includes disclosures on legal proceedings, risk factors, equity security sales, other information, and exhibits [Item 1. Legal Proceedings](index=64&type=section&id=Item%201.%20Legal%20Proceedings.) The Company is not currently subject to any pending or threatened litigation expected to have a material adverse effect on its business or financial results - The Company is not currently involved in any legal proceedings or claims that are believed to have a material adverse effect on its business or financial results[288](index=288&type=chunk) [Item 1A. Risk Factors](index=64&type=section&id=Item%201A.%20Risk%20Factors.) The CarOffer wind-down poses significant risks, including adverse business impacts and **$14.0 million to $19.0 million** in expenditures; future asset impairment and macroeconomic factors also present risks - The wind-down of CarOffer, including its transaction business, may adversely impact the Company's business, financial performance, and reputation, with expected expenditures of **$14.0 million to $19.0 million**[290](index=290&type=chunk)[291](index=291&type=chunk) - Risks associated with the CarOffer wind-down include inability to retain qualified personnel, operational disruptions, diversion of management attention, exposure to unknown liabilities, and potential failure to realize anticipated benefits[294](index=294&type=chunk) - Goodwill, intangible assets, and other assets are subject to future impairment, as evidenced by the **$32.6 million** impairment charge related to CarOffer in Q2 2025, which could materially affect financial results[296](index=296&type=chunk) - Tariffs, trade restrictions, and other changes in trade policy could lead to economic downturns, impacting consumer demand for automobiles and adversely affecting the Company's business[297](index=297&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=66&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company had no unregistered equity sales, repurchasing **11,004 Class A shares** for **$329,000** in Q2 2025; **$15.5 million** remained authorized under the program, later increased to **$350.0 million** - No unregistered sales of equity securities occurred[299](index=299&type=chunk) | Period | Total Number of Shares of Common Stock Purchased | Weighted Average Price Paid per Share of Common Stock | | :----------------------------------- | :--------------------------------------------- | :------------------------------------------ | | April 1, 2025 through April 30, 2025 | 6,423 | $29.15 | | May 1, 2025 through May 31, 2025 | 600 | $30.94 | | June 1, 2025 through June 30, 2025 | 3,981 | $30.92 | | Total (Q2 2025) | 11,004 | $29.89 | - As of June 30, 2025, **$15.5 million** remained authorized under the Original 2025 Share Repurchase Program, which was subsequently amended to **$350.0 million**[106](index=106&type=chunk)[301](index=301&type=chunk) [Item 5. Other Information](index=67&type=section&id=Item%205.%20Other%20Information) Jennifer Hanson, Chief People Officer, adopted a Rule 10b5-1 trading arrangement on June 4, 2025, to sell up to **27,978 Class A shares** by July 6, 2026, with no other similar arrangements by officers or directors - Jennifer Hanson, Chief People Officer, adopted a Rule 10b5-1 trading arrangement on June 4, 2025, to sell up to **27,978 shares** of Class A common stock by July 6, 2026[302](index=302&type=chunk) - The arrangement includes shares to be received upon future vesting of equity awards, net of taxes[305](index=305&type=chunk) [Item 6. Exhibits](index=68&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed or incorporated by reference into the Quarterly Report, including offer letters, relocation agreements, certifications, and XBRL documents - Exhibits include offer letters, relocation agreements, certifications (e.g., 31.1, 32.1), and Inline XBRL documents[307](index=307&type=chunk) [Signatures](index=69&type=section&id=Signatures) The report is duly signed on behalf of CarGurus, Inc. by Jason Trevisan, Chief Executive Officer, on August 7, 2025 - The report was signed by Jason Trevisan, Chief Executive Officer, on August 7, 2025[312](index=312&type=chunk)

Financial Performance - Marketplace revenue increased by 14% year-over-year to $222.0 million in Q2 2025, contributing to total revenue of $234.0 million, which is a 7% increase [4] - Non-GAAP Adjusted EBITDA for Q2 2025 reached $77.3 million, up 39% year-over-year, with a margin of 33% [4] - The company reported a net income of $22.3 million for Q2 2025, with a GAAP net income margin of 10% [4] - Total revenue for Q2 2025 reached $234.033 million, a 7% increase from $218.692 million in Q2 2024 [27] - Marketplace revenue was $221.998 million, up 14% from $195.167 million year-over-year [27] - Net income for the six months ended June 30, 2025, was $61.388 million, compared to a net loss of $47.420 million in the same period of 2024 [27] - Gross profit for Q2 2025 was $204.382 million, an increase from $182.444 million in Q2 2024 [27] - Operating expenses decreased significantly to $179.538 million in Q2 2025 from $276.028 million in Q2 2024 [27] - The company reported a basic net income per share of $0.23 for Q2 2025, compared to a loss of $0.66 per share in Q2 2024 [27] - Non-GAAP net income for the three months ended June 30, 2025, was $56,861, up 39.7% from $40,709 in the prior year [33] - Revenue for the three months ended June 30, 2025, was $234,033, an increase of 7% from $218,692 in the same period last year [35] - GAAP gross profit margin improved to 87% for the three months ended June 30, 2025, compared to 83% in the prior year [35] - Non-GAAP adjusted EBITDA for the three months ended June 30, 2025, was $77,296, a 39.1% increase from $55,556 in the same period last year [34] Business Strategy - CarGurus plans to wind down the CarOffer transactions business, focusing instead on technology and analytics for smarter sourcing decisions [14] - The company plans to focus on technology and analytics to enhance sourcing and pricing decisions moving forward [24] - The company is winding down the CarOffer business, which may impact operations and relationships with dealers [24] Cash and Assets - Cash and cash equivalents at the end of Q2 2025 were $231.2 million, reflecting a 24% decrease year-over-year [4] - Cash and cash equivalents decreased to $231.233 million as of June 30, 2025, from $304.193 million at the end of 2024 [26] - Total assets decreased to $726.121 million as of June 30, 2025, from $824.536 million at the end of 2024 [26] - The company reported a total cash balance of $233,349 at the end of the period, compared to $218,365 at the end of the same period last year [32] Dealer Metrics - U.S. paying dealers increased by 4% year-over-year to 25,478, while international paying dealers grew by 10% to 7,617 [7] - The number of paying dealers is a key metric, indicating the value proposition of marketplace products and sales success [46] - Quarterly Average Revenue per Subscribing Dealer (QARSD) is crucial for assessing the return on investment for paying dealers [47] Impairments and Losses - The company recorded impairments of $32.6 million during Q2 2025, impacting the Digital Wholesale Segment operating loss [8] - Impairments recorded in Q2 2025 were $29,633, consistent with the previous year's figures, indicating stability in this area [36] - Digital Wholesale segment incurred a loss of $37,041, an improvement from a loss of $138,158 year-over-year [30] Cash Flow - Cash provided by operating activities for the six months ended June 30, 2025, was $140,998, up from $123,561 in the prior year [32] - The company experienced a net cash used in investing activities of $15,476 for the six months ended June 30, 2025, compared to $44,373 in the prior year [32] - GAAP net cash provided by operating activities for Q2 2025 was $73,119, compared to $71,597 in Q2 2024, reflecting a year-over-year increase of 2.1% [38] - Non-GAAP free cash flow for Q2 2025 was $65,274, significantly higher than $40,371 in Q2 2024, representing an increase of 61.8% [38] Transactions and User Metrics - The Digital Wholesale segment's Transactions are defined as the number of vehicles processed through the CarOffer website, with each unique vehicle reaching "sold and invoiced" status counted once [48] - Transactions are a key business metric, driving significant revenue for the Digital Wholesale segment, and growth in Transactions indicates increased consumer and dealer utilization [48] - Starting in the second half of 2025, Transactions are expected to decrease due to the wind down of CarOffer, including the CarOffer Transactions Business [48] - Monthly unique users and monthly sessions are key metrics measured using Google Analytics, transitioning to GA4 effective July 1, 2024, with different methodologies that are not comparable [49] - Average monthly unique users are calculated as the sum of monthly unique users across websites, divided by the number of months in the period, reflecting user experience and brand awareness [51] - Monthly sessions are defined as distinct visits to websites that include a Visitor Action, with average monthly sessions calculated similarly to unique users [52] - The definition of a session includes the first Visitor Action and ends after 30 minutes of inactivity, providing insights into consumer satisfaction and engagement [52] - Connections between consumers and dealers are crucial for marketplace revenue, defined as interactions through various communication methods [51] - The transition to GA4 will impact the comparability of user metrics, making historical data unavailable for prior periods [49] - The company views measuring unique users and sessions as essential for understanding marketplace value to dealers [52]

Core Insights - CarGurus reported a strong performance in its Marketplace business, with revenue increasing by 14% year-over-year in Q2 2025, reaching $222 million [1][4] - The company achieved a net income of $22.3 million for Q2 2025, with a Non-GAAP Adjusted EBITDA of $77.3 million, reflecting a 39% increase year-over-year [1][4] - The Board of Directors approved an additional $150 million share repurchase program, raising the total authorization for 2025 to $350 million, which will extend through July 2026 [1][4] Financial Performance - Total revenue for Q2 2025 was $234 million, a 7% increase from the previous year, while total revenue for the first half of 2025 was $459.2 million, up 6% year-over-year [4][25] - Gross profit for Q2 2025 was $204.4 million, representing a 12% increase year-over-year, with a gross margin of 87% [4][25] - Operating expenses decreased by 35% in Q2 2025, totaling $179.5 million, contributing to improved profitability [4][25] Business Strategy - The company plans to wind down its CarOffer transactions business, focusing instead on enhancing technology and analytics to support smarter sourcing decisions [2][11] - CarGurus aims to continue delivering AI-powered inventory intelligence and consumer vehicle sourcing at scale through its existing platforms [11][12] - The wind-down of CarOffer is expected to incur costs between $14 million and $19 million, primarily in the second half of 2025 [12][13] Key Performance Indicators - The number of U.S. paying dealers increased by 4% to 25,478, while international paying dealers rose by 10% to 7,617, resulting in a total of 33,095 paying dealers, a 6% increase [5] - U.S. average monthly unique users reached 34.1 million, with average monthly sessions at 84.6 million [5] - The U.S. Marketplace segment revenue was $202.7 million, up 13% year-over-year, while the digital wholesale segment revenue decreased by 49% [5][27] Guidance - For Q3 2025, CarGurus expects Marketplace revenue to be between $228 million and $233 million, with Non-GAAP earnings per share projected between $0.50 and $0.58 [7][8] - The guidance reflects management's expectations based on current market trends and industry conditions [8][9]

Core Insights - CarGurus (CARG) is expected to report quarterly earnings of $0.54 per share, a 31.7% increase year-over-year, with revenues projected at $232.7 million, reflecting a 6.4% year-over-year increase [1] Earnings Projections - There have been no revisions in the consensus EPS estimate for the quarter over the last 30 days, indicating stability in analysts' forecasts [1][2] Revenue Estimates - The consensus estimate for 'Revenue- Marketplace' is $221.50 million, indicating a year-over-year increase of 13.5% [4] - The estimate for 'Revenue- Wholesale' is $6.89 million, showing a significant decline of 47.5% from the previous year [4] - Analysts predict 'Revenue- Product' to be $4.91 million, reflecting a year-over-year decrease of 52.8% [4] Dealer Metrics - The projected number of 'Paying Dealers - U.S' is 25,322, up from 24,446 in the same quarter last year [5] - 'Paying Dealers - International' is expected to reach 7,288, compared to 6,906 in the same quarter last year [5] - The total 'Paying Dealers' is forecasted to be 32,611, an increase from 31,352 in the same quarter last year [5] Stock Performance - CarGurus shares have decreased by 6.6% over the past month, contrasting with a 0.5% increase in the Zacks S&P 500 composite [6] - The company holds a Zacks Rank 3 (Hold), suggesting it is expected to closely follow overall market performance in the near term [6]

Core Insights - CarGurus has announced its 11th annual Top Dealer Awards, recognizing dealerships in North America and the U.K. that excel in customer service and digital retail innovation [1][2] Group 1: Awards Overview - The Top Dealer Awards highlight dealerships that prioritize a customer-first approach, utilizing data and market intelligence to enhance the shopping experience [2] - Award categories include Top Rated Dealer, Top Value Dealer, and Top Digital Dealer, each focusing on different aspects of dealership performance [7] Group 2: Award Criteria - Top Rated Dealer recognizes dealerships with an average rating of at least 4.5 out of 5, based on a minimum of five new reviews in 2024 for U.S. dealers and four for Canadian and U.K. dealers [7] - Top Value Dealer honors the top 100 dealerships in each region with the highest percentage of inventory rated as a "Good" or "Great" deal according to CarGurus' deal rating algorithm [7] - Top Digital Dealer celebrates U.S. dealerships that provide a seamless digital retail experience, spotlighting those with the highest share of inventory available for online transactions [7] Group 3: Company Background - CarGurus is a leading online automotive platform for buying and selling vehicles, offering digital retail solutions and the CarOffer online wholesale platform [5] - The platform aims to provide consumers with confidence in their vehicle purchases and assists dealerships in pricing, marketing, and selling vehicles effectively [5] - CarGurus operates in multiple markets, including Canada and the U.K., and also manages independent online marketplaces like Autolist and PistonHeads [6]

Core Viewpoint - CarGurus, Inc. will announce its financial results for the quarter ended June 30, 2025, on August 7, 2025, after market close [1] Group 1: Financial Results Announcement - The financial results will be reported via a press release [1] - A conference call and live webcast will be held at 5:00 p.m. Eastern Time on August 7, 2025, for investors and analysts [2] - An audio replay of the call will be available from 8:00 p.m. Eastern Time on August 7, 2025, until 11:59 p.m. Eastern Time on August 21, 2025 [3] Group 2: Company Overview - CarGurus is a leading online automotive platform for buying and selling vehicles, utilizing proprietary technology and data analytics [4] - The company operates in the U.S., Canada, and the U.K., and also manages independent online marketplaces like Autolist and PistonHeads [5] - CarGurus is recognized as the most visited automotive shopping site in the U.S. [4]

Industry Overview - Ecommerce sales in Q1 2025 grew by 6.1% compared to Q1 2024, while total retail sales increased by 4.5%, with ecommerce accounting for approximately 16.2% of total U.S. retail sales [1] - The ecommerce industry is experiencing a shift towards digital influencers and advanced technologies such as AR/VR, social commerce, generative AI, and the Metaverse [4][5] - The Zacks Internet - Commerce industry ranks 51, placing it in the top 21% of nearly 250 Zacks industries, indicating positive near-term prospects [8][9] Current Trends - The retail experience is increasingly blending online and offline activities, with consumers preferring faster delivery and pickup options [7] - Subscription models for repeat-use items are gaining traction, making it easier for consumers to order and for retailers to plan [7] - Social commerce is becoming popular, particularly among Gen-Z, with platforms like TikTok leading the way [14] Performance Metrics - The Zacks Electronic - Commerce Industry has gained 18% over the past year, outperforming the broader Zacks Retail and Wholesale Sector (16.5%) and the S&P 500 (11.9%) [12] - The industry is currently trading at a price-to-forward earnings (P/E) ratio of 24.6X, which is a premium of 8.6% to the S&P 500 and a discount of 0.8% to the broader retail sector [16] Company Highlights Groupon, Inc. (GRPN) - Groupon operates an online marketplace connecting buyers and sellers across various sectors, with over 76% of its 2024 revenue coming from the U.S. [19] - The company has shown a positive trend in earnings estimates, with the 2025 estimate moving from a loss of $0.18 to a profit of $0.30 per share [21] - Groupon's shares have increased by 146.9% over the past year, primarily in the last two months [22] CarGurus, Inc. (CARG) - CarGurus offers an online marketplace for new and used cars, with 93% of its 2024 revenue generated in the U.S. [25] - The company has no debt and is focused on improving dealer profitability through data-driven solutions, which is driving its market share [27] - Analysts estimate a 25% earnings growth for 2025, with revenues expected to increase by 5% [28]

Core Insights - The article emphasizes the importance of efficiency levels in assessing a company's potential for profitability, suggesting that higher efficiency correlates with better price performance [1] Efficiency Ratios - Receivables Turnover measures a company's ability to extend credit and collect debts, with a higher ratio indicating better performance [2] - Asset Utilization indicates how effectively a company converts its assets into sales, with higher values suggesting greater efficiency [3] - Inventory Turnover assesses a company's ability to manage inventory relative to its cost of goods sold, where a higher ratio indicates better inventory management [4] - Operating Margin reflects a company's control over operating expenses, with higher margins indicating more efficient expense management [5] Screening Criteria - The screening process included efficiency ratios that surpassed industry averages, narrowing down over 7,906 stocks to 12 candidates [7] - A favorable Zacks Rank of 1 (Strong Buy) was also included to enhance the profitability of the strategy [6] Selected Stocks - Post Holdings (POST), CarGurus (CARG), and Koppers (KOP) were identified as top stocks based on strong efficiency metrics, each exceeding industry averages [8] - POST reported an average earnings surprise of 22.9%, CARG had 11.8%, and KOP achieved 6% [8][9][10][11]