CarGurus(CARG) - 2025 Q3 - Quarterly Results

Financial Performance - Q3'25 Marketplace revenue increased by 14% year-over-year to $232 million, exceeding the midpoint of guidance[1] - GAAP Marketplace operating income reached $64.1 million, while Non-GAAP Adjusted EBITDA was $82.4 million, up 18% year-over-year[1] - Total revenue for Q3'25 was $238.7 million, a 3% increase compared to the prior year, with gross profit margin at 89%[4] - The U.S. Marketplace Segment revenue for Q3'25 was $210.4 million, reflecting a 12% increase year-over-year[8] - Digital Wholesale Segment revenue declined by 74% to $7.0 million in Q3'25[8] - U.S. Marketplace revenue was $210.4 million, up 12.3% from $187.3 million in the same quarter last year[29] - Gross profit for Q3 2025 was $213.5 million, compared to $182.6 million in Q3 2024, reflecting a 16.9% increase[27] - Net income for Q3 2025 was $44,717,000, a 98.5% increase from $22,511,000 in Q3 2024[32] - Non-GAAP net income for Q3 2025 reached $56,448,000, compared to $46,232,000 in Q3 2024, reflecting a 22.5% year-over-year growth[33] - GAAP net income margin improved to 19% in Q3 2025 from 10% in Q3 2024[35] - Non-GAAP adjusted EBITDA for Q3 2025 was $78,666,000, up from $64,882,000 in Q3 2024, indicating a 21.1% increase[35] - Marketplace (U.S. Marketplace Segment and Other) operating income for Q3 2025 was $64,115,000, a 21.6% increase from $52,751,000 in Q3 2024[36] - Non-GAAP Marketplace adjusted EBITDA for Q3 2025 was $82,447,000, compared to $70,126,000 in Q3 2024, representing a 17.5% growth[36] Guidance and Projections - Fourth quarter 2025 guidance for Marketplace revenue is projected between $236 million and $241 million[11] - Full-year 2025 guidance for Marketplace revenue is estimated to be between $902 million and $907 million[11] - Non-GAAP earnings per share for full-year 2025 is expected to range from $2.19 to $2.25[11] Dealer Metrics - The number of U.S. paying dealers grew by 5% to 25,743, while international paying dealers increased by 11% to 7,930[8] - The number of paying dealers is crucial as it reflects the value proposition of marketplace products and the success in sales and marketing[49] - Quarterly Average Revenue per Subscribing Dealer (QARSD) is calculated based on marketplace revenue from subscriptions divided by the average number of paying dealers, indicating product value and ROI[50] Cash Flow and Expenses - Cash provided by operating activities for the nine months ended September 30, 2025, was $212,163,000, an increase from $179,757,000 in the same period of 2024[32] - Total cash, cash equivalents, and restricted cash at the end of Q3 2025 was $178,855,000, down from $250,741,000 at the end of Q3 2024[32] - Operating expenses for Q3 2025 totaled $158.9 million, slightly up from $155.1 million in Q3 2024[27] - Stock-based compensation expense for Q3 2025 was $12,627,000, compared to $15,455,000 in Q3 2024, showing a decrease of 18.3%[33] - The company reported a net cash used in investing activities of $7,156,000 for Q3 2025, a decrease from $14,895,000 in Q3 2024[32] - Total operating expenses for Q3 2025 were $158.9 million, down from $184.0 million in Q3 2024, leading to a non-GAAP operating expense of $141.9 million[38] - Non-GAAP free cash flow for Q3 2025 was $64.0 million, significantly higher than $41.3 million in Q3 2024[40] Assets and Liabilities - Total assets decreased to $660.5 million as of September 30, 2025, down from $824.5 million at the end of 2024[26] - Current liabilities increased to $93.9 million as of September 30, 2025, compared to $93.1 million at the end of 2024[26] Strategic Initiatives - The company is winding down its CarOffer business, which may impact future operations and relationships with dealers[24] - The company aims to innovate and realize benefits from acquisitions while navigating competitive and rapidly changing market conditions[24] Non-GAAP Financial Measures - Non-GAAP net income metrics are utilized for evaluating operating results, excluding certain expenses such as stock-based compensation and impairments[44] - The company emphasizes the importance of non-GAAP financial measures for operational decision-making and transparency[41] - Company presented non-GAAP Adjusted EBITDA and non-GAAP Adjusted EBITDA margin as key measures for evaluating operating performance and making strategic decisions[46] - Non-GAAP Marketplace Adjusted EBITDA is defined as GAAP Marketplace operating income adjusted for depreciation, stock-based compensation, and transaction-related expenses[47] - Free Cash Flow is defined as cash flow from operations after expenditures for property, equipment, and website development costs, indicating financial performance[48]