CarGurus(CARG) - 2025 Q2 - Quarterly Results

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]