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].

Financial Performance - Q3 2024 Marketplace revenue increased by 15% year-over-year to $204.0 million[3] - Consolidated GAAP Net Income for Q3 2024 was $22.5 million, up 19% year-over-year[3] - Non-GAAP Consolidated Adjusted EBITDA reached $64.9 million, reflecting a 33% increase year-over-year[3] - Total revenue for Q3 2024 was $231.4 million, a 5% increase compared to the previous year[3] - The company reported a consolidated net income of $22.51 million for the three months ended September 30, 2024, compared to $18.97 million in the same period of 2023[19] - Consolidated net income for the three months ended September 30, 2024, was $22,511,000, an increase from $18,973,000 in the same period of 2023, representing a growth of approximately 18.1%[22] - Non-GAAP consolidated net income for the three months ended September 30, 2024, was $47,058,000, compared to $37,515,000 in the same period of 2023, reflecting a year-over-year increase of about 25.5%[23] - The company experienced a net loss attributable to common stockholders of $24.91 million for the nine months ended September 30, 2024, compared to a net income of $54.85 million in the same period of 2023[19] Revenue Guidance - Fourth Quarter 2024 guidance for total revenue is projected between $219 million and $239 million[6] - Full-Year 2024 guidance for total revenue is estimated to be between $885 million and $905 million[6] Dealer Metrics - U.S. Paying Dealers remained stable at 24,561, a 1% increase year-over-year[5] - International Paying Dealers grew by 4% to 7,123[5] - Quarterly Average Revenue per Subscribing Dealer (QARSD) is calculated based on marketplace revenue divided by the average number of paying dealers, indicating product value and return on investment[46] Cash Flow and Assets - The company reported a net cash provided by operating activities of $56,196,000 for the three months ended September 30, 2024, significantly up from $26,350,000 in the prior year, marking an increase of approximately 113.0%[22] - The company’s cash and cash equivalents were $246.75 million as of September 30, 2024, down from $291.36 million as of December 31, 2023[16] - The cash, cash equivalents, and restricted cash at the end of the period was $250,741,000 as of September 30, 2024, down from $366,954,000 at the end of September 30, 2023[22] - The total current assets decreased to $326.64 million as of September 30, 2024, from $391.19 million as of December 31, 2023[16] Expenses and Impairments - Operating expenses for the three months ended September 30, 2024, totaled $155.12 million, an increase from $141.20 million in the same period of 2023[19] - Total cost of revenue and operating expenses for the three months ended September 30, 2024, was $203,924 thousand, down from $219,379 thousand in the same period last year[31] - The company experienced a goodwill and other asset impairment of $16,776,000 for the three months ended September 30, 2024, while there was no impairment recorded in the same period of 2023[23] - The company recognized a goodwill impairment charge of $127.5 million during the nine months ended September 30, 2024[27] Shareholder Actions - The Board of Directors authorized a $200.0 million share repurchase program for fiscal year 2025[1] Operational Metrics - Monthly unique users and sessions are measured using GA4, with adjustments for accuracy, impacting the understanding of user engagement[48][49] - Average monthly unique users are calculated to assess user experience and brand awareness, crucial for marketplace revenue generation[49] - Monthly sessions are defined as distinct visits including visitor actions, providing insights into consumer satisfaction and engagement[50] - Transactions in the Digital Wholesale segment represent unique vehicles processed, serving as a key business metric for growth and revenue insights[47] Financial Measures - The company aims to enhance transparency with respect to metrics used in financial and operational decision-making through the use of non-GAAP financial measures[36] - Consolidated Adjusted EBITDA and Adjusted EBITDA are key measures for evaluating operating performance and strategic decision-making[43] - Free Cash Flow is defined as cash flow from operations after capital expenditures, indicating financial performance and asset maintenance[44] - Non-GAAP gross profit margin is calculated as non-GAAP gross profit divided by total revenue, providing insights into operational efficiency[39]

Core Insights - CarGurus (CARG) is expected to report quarterly earnings of $0.42 per share, reflecting a 23.5% increase year-over-year [1] - Analysts forecast revenues of $223.01 million, indicating a 1.6% year-over-year growth [1] - The consensus EPS estimate has been adjusted downward by 3.8% over the past 30 days, showing a reassessment by analysts [1] Revenue Estimates - 'Revenue- Marketplace' is projected at $201.52 million, representing a 13.3% year-over-year increase [4] - 'Revenue- Wholesale' is expected to reach $11.86 million, indicating a significant decline of 45.5% from the previous year [4] - 'Revenue- Product' is estimated at $9.13 million, reflecting a decrease of 53.9% compared to the prior-year quarter [4] Dealer Metrics - The consensus estimate for 'Paying Dealers - Total' is 31,542, up from 31,191 a year ago [5] - 'Paying Dealers - U.S' is estimated at 24,534, compared to 24,368 in the same quarter last year [5] - 'Paying Dealers - International' is projected at 6,946, slightly up from 6,823 a year ago [5] Stock Performance - CarGurus shares have increased by 5.1% in the past month, outperforming the Zacks S&P 500 composite, which rose by 0.7% [5] - The company holds a Zacks Rank 4 (Sell), indicating expectations of underperformance relative to the overall market in the near term [5]

Core Insights - CarGurus has launched a new digital retail solution called CarGurus Digital Deal in Canada, aimed at enhancing connections between dealers and purchase-ready shoppers [1][2] - The solution allows consumers to start their financing applications online, book appointments, and initiate trade-ins before visiting the dealership, streamlining the buying process [2][3] Company Overview - CarGurus is a multinational online automotive platform that facilitates buying and selling vehicles, leveraging proprietary technology and data analytics to enhance trust and transparency in the automotive shopping experience [5] - The company operates in multiple countries, including the U.S., U.K., and Canada, and is recognized as the fastest-growing automotive shopping site in Canada [5][6] Product Features - CarGurus Digital Deal enables a three-step process for consumers to build personalized finance applications that are submitted directly to participating dealerships [2][3] - The solution is integrated with dealer finance portal platform CreditApp, allowing customization with dealers' preferred lender networks [3] Market Impact - The introduction of Digital Deal is expected to connect dealers with higher-converting leads, facilitating faster and more efficient sales across over 15,000 vehicle listings in Canada [3] - Dealers have reported that the solution simplifies the buying process and improves engagement with shoppers, leading to higher conversion rates [4]