CARG Q3 Deep Dive: Marketplace Growth, AI Product Expansion, and International Momentum

Core Insights - CarGurus reported Q3 CY2025 results that exceeded market revenue expectations, with sales increasing by 3.2% year-on-year to $238.7 million, and non-GAAP profit of $0.57 per share, which was 3.7% above analysts' consensus estimates [1][3][5] Financial Performance - Revenue for Q3 CY2025 was $238.7 million, surpassing analyst estimates of $235 million, reflecting a 3.2% year-on-year growth and a 1.6% beat [5] - Adjusted EPS was $0.57, exceeding analyst estimates of $0.55 by 3.7% [5] - Adjusted EBITDA reached $78.67 million, with a margin of 33%, beating analyst estimates of $76.39 million [5] - Operating margin improved to 22.9%, up from 11.9% in the same quarter last year [5] - The number of paying dealers increased to 33,673, up by 1,989 year-on-year [5] - Market capitalization stands at $3.18 billion [5] Future Outlook - Guidance for Q4 CY2025 includes revenue of $238.5 million at the midpoint, which aligns with analyst expectations, and adjusted EPS guidance of $0.64, above analyst estimates of $0.61 [5] - EBITDA guidance for Q4 CY2025 is set at $87 million at the midpoint, exceeding analyst estimates of $84.27 million [5] - Management emphasized ongoing investments in AI-driven product innovation and deeper integration of software across dealer workflows as key to future performance [4] - The company aims to capture greater dealer wallet share and drive more efficient transactions through new offerings like PriceVantage and CG Discover [4] - While management is optimistic about sustaining double-digit growth rates, they acknowledged potential macroeconomic headwinds and changing consumer sentiment [4]