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Financial Data and Key Metrics Changes - In Q3 2025, consolidated revenue was $239 million, up 3% year-over-year [27] - Marketplace revenue was $232 million, reflecting a 14% year-over-year increase, driven by subscription-based listings revenue [28] - Non-GAAP gross profit was $214 million, up 11% year-over-year, with a non-GAAP gross margin of 90%, an increase of about 650 basis points [29] - Adjusted EBITDA was approximately $79 million, up 21% year-over-year, with an adjusted EBITDA margin of 33%, up about 490 basis points [30] - Non-GAAP diluted earnings per share was $0.57, reflecting a 30% year-over-year increase [32] Business Line Data and Key Metrics Changes - U.S. CarSID grew 8% year-over-year, with 1,182 new paying U.S. dealers added, marking the seventh consecutive quarter of positive net dealer adds [28] - International operations saw revenue growth of 27% year-over-year, with international CarSID up 15% year-over-year [28] - Wholesale revenue was approximately $2 million, and product revenue was roughly $5 million, as the company ceased facilitating transactions in the CarOffer business [29] Market Data and Key Metrics Changes - The international market is showing strong growth, with a focus on building market share while maintaining competitive pricing [42][44] - The company is experiencing a trend of dealers using fewer marketplace partners, indicating consolidation in the market [37] Company Strategy and Development Direction - The company is expanding its suite of data-driven solutions across dealer workflows to enhance profitability [10] - New product innovations include Price Vantage, a machine learning-based pricing tool, and CG Discover, a GenAI-powered shopping assistant [10][16] - The strategy focuses on deepening monetization across four key pillars: inventory, marketing, conversion, and data [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength and growth of the marketplace, with expectations for continued investment in AI-centric innovations [35] - The company anticipates capturing more dealer wallet share and deepening consumer engagement to support long-term growth [27][35] - Management noted that the combination of proprietary data and machine learning positions the company for new levels of intelligence and efficiency [26] Other Important Information - The company is winding down the CarOffer transactions business, which is expected to be accounted for as a discontinued operation in Q4 [29] - The company has approximately $55 million remaining on its share repurchase authorization [32] Q&A Session Summary Question: What is the trend regarding dealers using CarGurus? - Management noted that dealers are using fewer marketplace partners, with the average dropping from three to under two, indicating consolidation [37] Question: How is the ROI for Digital Deal perceived by dealers? - Management highlighted that 80% of consumers want to engage more online, and the Digital Deal program is packaged into premium tiers, driving higher quality leads and ROI for dealers [39] Question: What are the growth prospects in international markets? - Management expressed pride in international growth, emphasizing the importance of lead quality and competitive pricing to attract dealers [42][44] Question: How does CarSID growth relate to dealer rooftops? - Management explained that CarSID growth is influenced by the number of rooftops, with a natural headwind when rooftops grow faster than CarSID [50] Question: What insights are generated from Dealership Mode? - Management indicated that Dealership Mode provides valuable consumer insights, helping dealers understand customer interests and financing needs [58][59]

Group 1 - As of September 25, 2025, two stocks in the communication services sector are showing signs of being overbought, which may concern momentum-focused investors [1][2] - The Relative Strength Index (RSI) is a key momentum indicator, with values above 70 indicating that a stock may be overbought [2] Group 2 - Baidu Inc (NASDAQ: BIDU) received Dubai's first autonomous driving trial permit and 50 test licenses, leading to a stock price increase of approximately 45% over the past month, with an RSI value of 75.9 [7] - Baidu's stock closed at $132.92, with a 52-week high of $141.60 and a momentum score of 83.05 [7] - CarGurus Inc (NASDAQ: CARG) reported a strong second-quarter performance with a 14% year-over-year revenue growth and announced a $150 million share repurchase program, resulting in an 11% stock price increase over the past month [7] - CarGurus' stock closed at $37.85, with a 52-week high of $41.33 and an RSI value of 72.4 [7]

Core Viewpoint - Cars.com (CARS) shows potential for significant upside, with a mean price target of $17.17 indicating a 30.4% increase from its current price of $13.17 [1] Price Targets and Analyst Consensus - The average price target for CARS ranges from a low of $11.00 to a high of $25.00, with a standard deviation of $5.38, indicating variability in analyst estimates [2] - The lowest estimate suggests a decline of 16.5%, while the highest points to an upside of 89.8% [2] - A low standard deviation indicates strong agreement among analysts regarding the stock's price movement direction [9] Earnings Estimates and Analyst Optimism - Analysts have shown increasing optimism about CARS' earnings prospects, with a positive trend in earnings estimate revisions [11] - Over the last 30 days, one estimate has increased, leading to a 9.9% rise in the Zacks Consensus Estimate for the current year [12] - CARS holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimates [13] Caution on Price Targets - While price targets are commonly referenced, they can mislead investors, as empirical research shows they rarely indicate actual stock price movements [7][10] - Analysts may set overly optimistic price targets due to business incentives, which can inflate expectations [8]

Group 1 - The analyst assigned a hold rating to CarGurus, Inc. (NASDAQ: CARG) in November, indicating that the valuation at that time had already accounted for expected upside over the next two years [1] - The investment approach focuses on identifying undervalued companies with long-term growth potential, emphasizing a blend of value investing principles and long-term growth [1] - The strategy involves purchasing quality companies at a discount to their intrinsic value and holding them to allow for compounding of earnings and shareholder returns [1]

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $234 million, up 7% year over year, slightly above the midpoint of guidance range [28] - Marketplace revenue was $222 million, up 14% year over year, driven by strength in subscription-based listings revenue [29] - Adjusted EBITDA was approximately $77 million, up 39% year over year, with an adjusted EBITDA margin of 33%, reflecting strong revenue growth and operating leverage [32][33] - Non-GAAP diluted earnings per share was $0.57, up 46% year over year [35] Business Line Data and Key Metrics Changes - Marketplace performance was a key contributor, with adjusted EBITDA growing 31% year over year [6] - International business revenue grew 28% year over year, with significant growth in Canada and the UK [7] - Wholesale revenue was approximately $6 million, down 52% year over year, driven by a 55% decrease in transaction volume [31] Market Data and Key Metrics Changes - The UK was the number one most downloaded automotive app in Q2, indicating rising consumer engagement [7] - CarGurus had nearly 85 million average monthly sessions and 34 million monthly unique visitors, with consumers spending 74% more total minutes on the site than the closest competitor [21] Company Strategy and Development Direction - The company is focusing on providing data-driven, scalable solutions to dealers, emphasizing technology and analytics for smarter sourcing and pricing [10] - A strategic reassessment led to the decision to wind down the CarOffer transactions business, while retaining the underlying technology for future sourcing strategies [10][26] - Future sourcing offerings will concentrate on AI-powered inventory intelligence and consumer vehicle sourcing at scale [27] Management's Comments on Operating Environment and Future Outlook - Management noted that while used inventory is up year over year, it has not returned to pre-COVID levels, indicating ongoing opportunities for dealers [50] - The macro environment remains uncertain, with high interest rates and elevated used car prices impacting dealer operations [58] - Management expressed confidence in the company's ability to grow engagement and provide value to dealers despite market challenges [59] Other Important Information - The company plans to execute against a clear set of priorities and invest in areas positioned for durable profitable growth [28] - A $150 million increase to the existing share repurchase program was approved, reinforcing the company's commitment to returning capital to shareholders [38] Q&A Session Summary Question: How should we think about dealer count or revenue per dealer? - Management indicated there is significant opportunity for existing products among the dealer base, with over 50% runway on most cross-sell products [44][46] Question: What's the outlook on increasing used supply as off-lease units come back? - Management noted that while used inventory is increasing, it is not at pre-COVID levels, and they see potential in sourcing intelligence to help dealers navigate the market [50][51] Question: Are dealers more willing to open their budgets with more certainty around tariffs? - Management acknowledged some easing of anxiety but emphasized ongoing uncertainty due to high interest rates and elevated used car prices [56][58] Question: How does the rise of AI tools affect the marketplace model? - Management highlighted the importance of their AI-driven tools like CG Discover, which enhance the consumer experience and engagement [63][66] Question: How do you plan to continue addressing the dealer-to-dealer side of the business? - Management confirmed plans to provide DDD capabilities through top dealer offers and emphasized the importance of predictive analytics for inventory management [83][84] Question: Will the company consider expanding beyond Canada and the UK? - Management stated that they will focus on current international markets where they are seeing strong performance [85]

Core Insights - CarGurus reported Q2 2025 GAAP revenue of $234.0 million, slightly exceeding analyst estimates of $232.7 million, with non-GAAP earnings per share of $0.57, surpassing expectations [1][2] - The company announced the winding down of its CarOffer transactions business due to underperformance, refocusing on its core Marketplace platform and data-driven dealer solutions [1][7] Financial Performance - Non-GAAP EPS increased by 46.2% year-over-year to $0.57, while GAAP revenue rose by 7% compared to Q2 2024 [2] - Gross profit (GAAP) reached $204.4 million, a 12.1% increase from the previous year, with gross margin improving to 87% [2][8] - Non-GAAP adjusted EBITDA grew by 39% to $77.3 million, reflecting a 33% margin, up from 25% in Q2 2024 [2][8] - Free cash flow (non-GAAP) surged by 61.6% year-over-year to $65.3 million [2][8] Business Segments - The Marketplace business generated $222.0 million in revenue, a 14% increase year-over-year, with operating income for the U.S. segment rising 40% to $58.8 million [5] - The number of U.S. paying dealers increased by 4% to 25,478, while international paying dealers grew by 10% to 7,617 [5][6] - The Digital Wholesale segment, primarily from CarOffer, saw a 49% revenue decline to $12.0 million, with transaction volumes dropping 55% [7] Strategic Focus - CarGurus is prioritizing technological innovation, particularly in AI and analytics tools to enhance dealer workflow and consumer experience [4] - The company plans to retain and expand its AI-powered dealer analytics and inventory intelligence offerings while improving core Marketplace functionalities [10] Market Outlook - For Q3 2025, management projects Marketplace revenue between $228–$233 million and non-GAAP EPS of $0.50–$0.58 [12] - Transition costs related to the CarOffer wind-down are expected to be between $14.0–19.0 million, primarily in the second half of 2025 [12] - The company emphasizes its competitive edge in data, technology, and dealer relationships amid increasing competition from other online auto platforms [11]

Financial Performance - Q2 2025 - Revenue for U S Marketplace & Other increased by 13 7% year-over-year, reaching $222 million[10] - Non-GAAP Gross Profit for U S Marketplace & Other was $206 4 million, with a margin of 93%[10] - Non-GAAP Adjusted EBITDA for U S Marketplace & Other grew by 30 8% year-over-year to $80 1 million, resulting in a 36% margin[10] - Digital Wholesale revenue was $12 million[10], with a Non-GAAP Gross Profit of $0 9 million and a Non-GAAP margin of 7%[10] - The company's Non-GAAP Adjusted EBITDA was $77 3 million, representing a 33% margin[10] Key Business Updates - Digital Deal adoption reached approximately 12,000 dealers, with Digital Deal Leads accounting for over 27% of email leads[15] - Max Margin adoption increased by approximately 70% quarter-over-quarter, while Merchandising Health grew by approximately 30% quarter-over-quarter[17] - Daily active users of the core dealer app functionality increased by 71% year-over-year[17] Dealer Base Growth - The U S paying dealer base grew by 8 5% year-over-year, an increase of 1,743 dealers[19] - The international paying dealer base increased by 19 3% year-over-year[19] - Average Quarterly Revenue per Subscribing Dealer (QARSD) in the U S increased to $7,533, while international QARSD reached $2,309[19] Q3 2025 Guidance - Marketplace Revenue is projected to be between $228 million and $233 million[38] - Non-GAAP Marketplace Adjusted EBITDA is expected to range from $76 5 million to $84 5 million[33]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $179 million, reflecting a steady year-over-year performance with a 5% growth in OEM and national revenue, partially offset by temporary softness in dealer revenue [5][21] - Adjusted EBITDA for Q2 was $51 million, with an adjusted EBITDA margin of 28.5%, at the high end of the outlook range, driven by cost efficiencies [27][34] - Net income for Q2 was $7 million, or $0.11 per diluted share, compared to $11 million, or $0.17 per diluted share a year ago [27] Business Line Data and Key Metrics Changes - Dealer count increased to 19,412, up 162 dealers quarter-over-quarter, marking the best sequential organic growth in over three years [5][14] - Solutions products, including AccuTrade and Dealer Club, contributed significantly to growth, with AccuTrade's subscriber base reaching 1,070 dealers [16][21] - Average revenue per dealer (ARPD) was $2,435, down approximately $40 year-over-year and sequentially, attributed to customer and product mix [28] Market Data and Key Metrics Changes - Traffic on the cars.com platform reached a record 162 million in Q2, up 2% year-over-year, with average monthly unique visitors totaling 26.6 million [10] - OEM and national revenue grew 5% year-over-year, with nearly half of OEM partners increasing their spending on the platform [8][25] - The marketplace performance showed strong momentum, with total marketplace customers growing sequentially every month since January [22] Company Strategy and Development Direction - The company is focused on enhancing its marketplace and solutions offerings, with new product innovations and repackaging efforts aimed at driving revenue growth [7][29] - Continued investment in AI features is expected to differentiate the platform and drive lead volume and quality [12][43] - The company anticipates low single-digit revenue growth for 2025, with expectations for acceleration heading into 2026 [9][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to achieve stronger financial results in the second half of 2025, driven by growth initiatives and improved sales velocity [20][34] - There remains uncertainty regarding new vehicle production and pricing forecasts, which could impact discretionary media spending [33] - Management noted that dealer sentiment is improving, with a willingness to compete more aggressively for volume [88] Other Important Information - The company raised its full-year share repurchase target to $70 million to $90 million, consistent with its commitment to return value to shareholders [20][31] - Free cash flow for the year-to-date was $42 million, down year-over-year, primarily due to anticipated earn-out payments [30] Q&A Session Summary Question: Clarification on outlook and acceleration in business - Management expects to see acceleration from Q2 to Q3 to Q4, driven by unit growth and repackaging efforts [38] Question: Average revenue per dealer expectations - Management anticipates that ARPD will improve sequentially from Q2 to Q3 as repackaging takes effect [40] Question: Impact of AI on marketplace model - Management views AI as an opportunity to enhance user experience and engagement, with a focus on integrating AI capabilities into the platform [42][43] Question: Drivers of dealer revenue growth and ARPD decline - The decline in ARPD is attributed to customer mix and product mix, with a growing base of solutions-first customers impacting initial ARPD [49] Question: Retention of AccuTrade customers - Retention is improving, particularly with enterprise-level deals that standardize AccuTrade across multiple stores [66] Question: Marketplace repackaging rollout - The repackaging effort will be rolled out over the course of two quarters, focusing on creating added value for dealers [68] Question: OEM growth as a tailwind - OEM growth is expected to contribute positively to revenue goals in both Q3 and Q4, with management staying close to OEM partners [73] Question: Competitive threat from Amazon - Management acknowledges Amazon as a potential threat but believes the company is well-positioned due to its established platform and strong dealer relationships [78]

Financial Performance - Revenue increased to $47.0 million in Q2 2025, a 12% year-over-year increase compared to $41.8 million in Q2 2024 [7] - Non-GAAP expenses increased to $48.2 million in Q2 2025, a 16% year-over-year increase compared to $41.7 million in Q2 2024 [7] - Adjusted EBITDA was negative $1.2 million in Q2 2025, compared to positive $0.1 million in Q2 2024, resulting in a margin of -2% [7] Traffic and Dealer Network - Traffic decreased to 5.5 million average monthly unique visitors in Q2 2025, a 29% year-over-year decrease compared to 7.7 million in Q2 2024 [9] - Total dealer count decreased slightly to 11,177 in Q2 2025, a 3% year-over-year decrease compared to 11,474 in Q2 2024 [9] - Franchise dealer count remained relatively stable at 8,292 in Q2 2025, a 0% year-over-year change compared to 8,274 in Q2 2024 [9] - Independent dealer count decreased to 2,885 in Q2 2025, a 10% year-over-year decrease compared to 3,200 in Q2 2024 [9] Unit Sales - Total units sold remained flat at 89,000 in Q2 2025, a 0% year-over-year change compared to 89,000 in Q2 2024 [9] - Units sold through TrueCar.com decreased by 2% year-over-year [29] - New car units increased by 6% year-over-year, while used car units decreased by 8% year-over-year [31] Revenue Breakdown - Net franchise revenue increased by 1% year-over-year [15] - Net independent revenue decreased by 11% year-over-year [15] - Other dealer product revenue increased by 129% year-over-year [15]