Core Viewpoint - CarGurus (CARG) shows a promising earnings outlook, with analysts raising their earnings estimates, indicating potential for continued stock momentum [1][2]. Estimate Revisions - The upward trend in earnings estimate revisions reflects growing analyst optimism about CarGurus' earnings prospects, which is expected to positively impact its stock price [2]. - For the current quarter, CarGurus is projected to earn $0.49 per share, a 40% increase from the previous year, with a 9.41% rise in the Zacks Consensus Estimate over the last 30 days [4]. - For the full year, the expected earnings are $1.66 per share, representing a year-over-year increase of 34.96%, with a 5.6% increase in the consensus estimate due to three upward revisions [5]. Zacks Rank - CarGurus has achieved a Zacks Rank 2 (Buy), indicating strong potential based on favorable estimate revisions, which historically lead to significant outperformance compared to the S&P 500 [6]. - Stocks rated Zacks Rank 1 (Strong Buy) and 2 (Buy) have shown an average annual return of +25% since 2008, highlighting the effectiveness of the Zacks Rank system [3][6]. Stock Performance - CarGurus' stock has increased by 11.1% over the past four weeks due to strong estimate revisions, suggesting further upside potential [7].

Core Viewpoint - CarGurus (NASDAQ: CARG) has a positive growth outlook due to its ability to monetize dealers through new product offerings [1] Group 1: Company Analysis - CarGurus is expected to benefit from its recent product rollouts aimed at enhancing dealer monetization [1] - The company is positioned to capitalize on long-term growth potential by focusing on quality offerings at competitive pricing [1]

Company Overview - CarGurus (CARG) currently holds a Momentum Style Score of B, indicating a positive momentum outlook for the company [3] - The company has a Zacks Rank of 2 (Buy), suggesting strong potential for outperformance in the market [4] Price Performance - Over the past week, CarGurus shares have increased by 2.38%, while the Zacks Automotive - Replacement Parts industry has declined by 2.28% [7] - In a longer time frame, CarGurus has seen an 11.81% price increase over the past month, outperforming the industry's 9.92% [7] - Over the last quarter, shares have risen by 23.56%, and over the past year, they have gained 68.89%, compared to the S&P 500's increases of 6.44% and 32.19%, respectively [8] Trading Volume - The average 20-day trading volume for CarGurus is 658,360 shares, which serves as a bullish indicator when combined with rising stock prices [9] Earnings Estimates - In the past two months, 3 earnings estimates for CarGurus have been revised upwards, while 1 has been revised downwards, leading to an increase in the consensus estimate from $1.62 to $1.66 [11] - For the next fiscal year, 4 estimates have moved higher, with 1 downward revision during the same period [11] Conclusion - Considering the positive price trends, trading volume, and upward revisions in earnings estimates, CarGurus is positioned as a 2 (Buy) stock with a Momentum Score of B, making it a potential candidate for near-term investment [12]

Core Viewpoint - CarGurus (CARG) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook based on an upward trend in earnings estimates [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, influencing their buying or selling decisions [4]. Company Performance Indicators - For the fiscal year ending December 2024, CarGurus is expected to earn $1.66 per share, reflecting a 35% increase from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for CarGurus has risen by 4.1%, indicating a positive trend in earnings expectations [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with only the top 20% receiving a 'Strong Buy' or 'Buy' rating [9][10]. - CarGurus' upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [11].

Core Insights - CarGurus, Inc. is the leading digital auto platform for shopping, buying, and selling new and used vehicles, with a scheduled participation in a fireside chat at RBC's 2024 Global Technology, Internet, Media and Telecommunications Conference on November 19, 2024 [1] Company Overview - CarGurus operates as a multinational online automotive platform that enhances its industry-leading listings marketplace with digital retail solutions and the CarOffer online wholesale platform [3] - The platform provides consumers with confidence in purchasing and selling vehicles, while enabling dealerships to accurately price, market, acquire, and sell vehicles effectively [3] - CarGurus is recognized as the most visited automotive shopping site in the U.S. and also operates marketplaces in Canada and the U.K. under the CarGurus brand, along with independent brands Autolist and PistonHeads [3]

Financial Data and Key Metrics Changes - Consolidated revenue for Q3 2024 was $231 million, up 5% year-over-year, driven by double-digit growth in the marketplace business [34] - Marketplace revenue reached $204 million, reflecting a 15% year-over-year increase, in line with the high end of guidance [34] - Non-GAAP consolidated adjusted EBITDA grew 33% year-over-year to $64.9 million, with a margin expansion of approximately 590 basis points to 28% [39] Business Line Data and Key Metrics Changes - Marketplace revenue growth was driven by a $25 million increase in subscription-based listings revenue, reflecting net dealer ads and greater adoption of value-added products [35] - Listings revenue grew by 15% year-over-year, supported by net dealer ads and migration to higher subscription tiers [15] - Wholesale revenue decreased by 44% year-over-year to $12 million, attributed to a decline in dealer-to-dealer transaction volume [36] Market Data and Key Metrics Changes - International business revenue grew 23% year-over-year, with dealer count and car seat growth up 4% and 20% respectively [35] - The company expanded its traffic share in Canada, experiencing session growth ahead of competitors [12] Company Strategy and Development Direction - The company is focused on building a transaction-enabled platform that leverages consumer data to provide actionable insights for dealer partners [8] - Continued investment in innovation and product pipeline is emphasized, with a strong commitment to enhancing the consumer experience [9][20] - The company aims to deepen connections with consumers while increasing operational efficiency and wallet share among dealers [8][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing strength of the marketplace business, expecting continued revenue growth despite tougher comparisons in 2025 [44] - The company is committed to enhancing its platform to better serve both dealer partners and consumers through ongoing product innovation [33] - Management noted that the decision to discontinue CG Buy Online was based on a disciplined capital allocation process and a strategic review of market demand [41][50] Other Important Information - The company ended Q3 2024 with $247 million in cash and cash equivalents, an increase of $31 million from the previous quarter [42] - A $200 million share repurchase program was authorized, effective January 2025, reflecting strong cash flow generation [43] Q&A Session Summary Question: Update on brand investment and CG Buy Online discontinuation - Management indicated plans to increase brand marketing efforts in the new year to enhance consumer awareness and support product improvements [48] - The decision to discontinue CG Buy Online was based on a thorough review of capital allocation and market demand [50] Question: Insights on Car Spend growth and product pipeline - Management expressed confidence in the growth pipeline, noting higher dealer engagement and adoption of value-added products [54] - The product pipeline is robust, focusing on upselling and cross-selling opportunities to enhance dealer workflows [56] Question: International business growth trajectory and OpEx increase - Management highlighted strong growth in international markets, driven by effective pricing strategies and product launches [62] - A one-off sales tax impact in Canada contributed to the increase in OpEx, which is expected to normalize [63] Question: Pricing strategy and consumer health assessment - Pricing is based on lead volume and quality, allowing for increased leverage due to strong ROI for dealers [74] - The consumer market showed strength in Q3, with expectations for continued demand despite typical seasonal trends [75]

Core Insights - CarGurus, Inc. reported better-than-expected third-quarter financial results and provided FY24 guidance with EPS expectations above estimates [1][2] Financial Performance - The company reported quarterly earnings of $0.45 per share, surpassing the analyst consensus estimate of $0.42 [2] - Quarterly sales reached $231.358 million, exceeding the analyst consensus estimate of $223.537 million [2] Management Commentary - CEO Jason Trevisan highlighted the acceleration in Marketplace revenue growth and the company's focus on cost efficiency, which contributed to operating efficiencies [2] - The company aims to enhance its value proposition for dealer partners through actionable insights and tools, driving adoption and retention on its platform [2] Future Guidance - For FY2024, CarGurus expects adjusted EPS in the range of $1.67 to $1.73, compared to estimates of $1.64 [2] - Projected sales for FY2024 are between $885 million and $905 million, slightly above the previous estimate of $883.61 million [2] Stock Performance - Following the earnings announcement, CarGurus shares increased by 4.9%, trading at $35.00 [2] Analyst Ratings and Price Targets - Oppenheimer analyst Jed Kelly maintained an Outperform rating and raised the price target from $32 to $44 [2] - DA Davidson analyst Tom White maintained a Neutral rating and increased the price target from $26.5 to $38.5 [2] - JP Morgan analyst Rajat Gupta maintained an Overweight rating and raised the price target from $36 to $40 [2] - Needham analyst Chris Pierce maintained a Buy rating and increased the price target from $27 to $39 [2] - The consensus price target for CarGurus is $32.7 based on ratings from 16 analysts, with a high of $44 and a low of $15 [3]

Core Viewpoint - CarGurus reported a revenue of $231.36 million for Q3 2024, marking a 5.4% year-over-year increase and exceeding the Zacks Consensus Estimate by 3.75% [1] Financial Performance - Earnings per share (EPS) for the quarter was $0.45, up from $0.34 a year ago, representing a surprise of 7.14% compared to the consensus estimate of $0.42 [1] - Total paying dealers reached 31,684, slightly above the average estimate of 31,542 [3] - U.S. paying dealers numbered 24,561, compared to the estimated 24,534 [3] - International paying dealers totaled 7,123, exceeding the average estimate of 6,946 [3] Revenue Breakdown - Marketplace revenue was reported at $204.02 million, surpassing the estimated $201.52 million, reflecting a 14.7% increase year-over-year [3] - Wholesale revenue was $12.11 million, slightly above the average estimate of $11.86 million, but down 44.3% year-over-year [3] - Product revenue reached $15.23 million, significantly higher than the estimated $9.13 million, but down 23% year-over-year [3] Stock Performance - CarGurus shares have increased by 7.7% over the past month, outperforming the Zacks S&P 500 composite, which rose by 3.2% [4] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance in the near term [4]

Company Performance - CarGurus reported quarterly earnings of $0.45 per share, exceeding the Zacks Consensus Estimate of $0.42 per share, and up from $0.34 per share a year ago, representing an earnings surprise of 7.14% [1] - The company posted revenues of $231.36 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 3.75%, and an increase from year-ago revenues of $219.42 million [2] - Over the last four quarters, CarGurus has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Stock Performance - CarGurus shares have increased approximately 36.1% since the beginning of the year, compared to the S&P 500's gain of 24.3% [3] - The current consensus EPS estimate for the coming quarter is $0.46 on revenues of $224.77 million, and for the current fiscal year, it is $1.61 on revenues of $882.21 million [7] Industry Outlook - The Automotive - Replacement Parts industry, to which CarGurus belongs, is currently ranked in the bottom 33% of over 250 Zacks industries, indicating potential challenges ahead [8] - The outlook for the industry can significantly impact the performance of CarGurus stock, as research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Financial Performance - For the three months ended September 30, 2024, CarGurus generated revenue of $231.4 million, a 5% increase from $219.4 million for the same period in 2023[137]. - For the nine months ended September 30, 2024, CarGurus generated revenue of $665.8 million, a 4% decrease from $691.1 million for the same period in 2023[139]. - Consolidated net income for the three months ended September 30, 2024, was $22.5 million, up from $19.0 million for the same period in 2023[137]. - Consolidated Adjusted EBITDA for the three months ended September 30, 2024, was $64.9 million, compared to $48.6 million for the same period in 2023[137]. - Consolidated Adjusted EBITDA for the nine months ended September 30, 2024, was $170,836 thousand, an increase from $134,631 thousand in the same period of 2023, representing a growth of about 27%[162]. - The company reported a total operating loss of $39,866 thousand for the nine months ended September 30, 2024, compared to an income of $54,892 thousand for the same period in 2023[201]. Revenue Breakdown - Marketplace revenue increased by $26,110 thousand, or 15%, to $204,019 thousand, representing 88% of total revenue for the three months ended September 30, 2024[207]. - Wholesale revenue decreased by $9,628 thousand, or 44%, to $12,107 thousand, accounting for 5% of total revenue for the three months ended September 30, 2024[208]. - Digital Wholesale segment revenue decreased to $27,339 thousand for the three months ended September 30, 2024, from $41,510 thousand in 2023, representing 12% of total revenue[203]. - Product revenue decreased by $4.5 million, or 23%, for the three months ended September 30, 2024, representing 7% of total revenue compared to 9% in the same period of 2023[209]. - Marketplace revenue increased by $70.4 million, or 14%, for the nine months ended September 30, 2024, representing 88% of total revenue[232]. - Wholesale revenue decreased by $37.5 million, or 48%, for the nine months ended September 30, 2024, representing 6% of total revenue[233]. - Product revenue decreased by $58.2 million, or 60%, for the nine months ended September 30, 2024, representing 6% of total revenue[234]. User Engagement - The average monthly unique users for the U.S. in September 2024 was 32,279 thousand, while international users were 9,861 thousand, totaling 42,140 thousand[144]. - The average monthly sessions for the U.S. in September 2024 was 80,370 thousand, with international sessions at 20,423 thousand, totaling 100,793 thousand[147]. - As of September 2024, the number of paying dealers in the U.S. was 24,561, an increase from 24,368 in September 2023, while international paying dealers rose to 7,123 from 6,823[149]. Expenses and Costs - Operating expenses totaled $155,117 thousand for the three months ended September 30, 2024, up from $141,203 thousand in the same period of 2023[206]. - Sales and marketing expense increased by $4.4 million, or 6%, for the three months ended September 30, 2024, accounting for 35% of total revenue[220]. - General and administrative expense increased by $3.3 million, or 13%, for the three months ended September 30, 2024, representing 12% of total revenue compared to 11% in the prior year[222]. - Goodwill and other asset impairment increased by $7.0 million for the three months ended September 30, 2024, representing 3% of total revenue[223]. - Total other income, net decreased by $4.0 million, or 30%, to $9.2 million for the nine months ended September 30, 2024, compared to $13.2 million for the same period in 2023[248]. Cash Flow and Financing - As of September 30, 2024, the company had cash and cash equivalents of $246.7 million, down from $291.4 million as of December 31, 2023[253]. - The company reported net cash provided by operating activities of $179.8 million for the nine months ended September 30, 2024, despite a consolidated net loss of $24.9 million[263]. - Net cash used in investing activities was $59.3 million for the nine months ended September 30, 2024, primarily due to $64.9 million in property and equipment purchases[265]. - Net cash used in financing activities was $164.3 million for the nine months ended September 30, 2024, mainly due to stock repurchases[267]. - The company entered into a Credit Agreement allowing borrowing up to $400.0 million, with $9.6 million in letters of credit outstanding as of December 31, 2023, reducing borrowing capacity to $390.4 million[258]. Impairments and Adjustments - The company recognized impairment losses of $115.2 million for goodwill and $127.5 million for the Digital Wholesale segment related to the CarOffer reporting unit[190]. - The CG Buy Online pilot was ended, resulting in impairment losses of $15.8 million for property and equipment and $9.8 million for wholesale cost of revenue[191]. - The company identified a triggering event for goodwill impairment testing at the CarOffer reporting unit, leading to a significant impairment charge[280]. Internal Controls and Risks - The company has identified a material weakness in internal control over financial reporting, which has not yet been fully remediated as of September 30, 2024[296]. - Management has implemented or enhanced certain controls to address specific issues related to the material weakness, but remediation will take time[302]. - The company does not expect material fluctuations in interest income from changes in the interest rate environment for the foreseeable future[289]. - The company does not believe inflation has materially affected its business to date, but significant inflationary pressures could harm operating results[291].