Online auto marketplace CarGurus (NASDAQ:CARG) reported Q3 CY2025 results exceeding the market’s revenue expectations , with sales up 3.2% year on year to $238.7 million. Guidance for next quarter’s revenue was better than expected at $238.5 million at the midpoint, 0.6% above analysts’ estimates. Its non-GAAP profit of $0.57 per share was 3.7% above analysts’ consensus estimates. Is now the time to buy CARG? Find out in our full research report (it’s free for active Edge members). CarGurus (CARG) Q3 CY ...

Core Insights - CarGurus aims to double its total addressable market by introducing AI-powered products beyond its current automotive shopping platform [1][2] - The company is expanding its addressable market to include $3.5 billion spent by U.S. dealers on marketplaces and an additional $4 billion on software and data products [2] Product Development - CarGurus has launched PriceVantage, a machine learning-based pricing solution for dealers that utilizes real-time consumer demand data [3][4] - PriceVantage helps dealers enhance pricing strategies, improve turn times, and increase profitability by providing data-driven recommendations [4] Performance Metrics - Early beta results for PriceVantage show that engaged dealers experienced a 5X improvement in turn-time compared to competitors, with price-drop recommendations leading to a 68% median increase in daily vehicle detail page views [5] - 77% of the recommendations from PriceVantage met or exceeded predicted sales velocity outcomes [5] Consumer-Focused Innovations - CarGurus introduced CG Discover, a generative AI-powered shopping assistant that personalizes vehicle recommendations based on consumer needs, with traffic to this tool tripling quarter over quarter [6] - Another tool, Dealership Mode, provides real-time support to consumers at dealerships, enhancing their experience by offering vehicle pricing, ratings, and financing calculators [6][7] Market Opportunity - Research indicates that 80% of consumers are open to using AI in their car-buying journey, highlighting significant growth potential for CarGurus' AI initiatives [6]

CarGurus (NasdaqGS:CARG) Q3 2025 Earnings Call November 06, 2025 05:00 PM ET Company ParticipantsJason Trevisan - CEOSam Zales - President and COOKirndeep Singh - VP and Head of Investor RelationsConference Call ParticipantsJames Sherman-Lewis - AnalystRajat Gupta - AnalystNone - AnalystChris Pierce - AnalystVincent Kardos - AnalystMarvin Fong - AnalystRyan Powell - AnalystOperatorGood day and welcome to the CarGurus Earnings Call. Please note that this event is being recorded. I would now like to turn the ...

CarGurus (NasdaqGS:CARG) Q3 2025 Earnings Call November 06, 2025 05:00 PM ET Company ParticipantsJason Trevisan - CEOSam Zales - President and COOKirndeep Singh - VP and Head of Investor RelationsConference Call ParticipantsJames Sherman-Lewis - AnalystRajat Gupta - AnalystNone - AnalystChris Pierce - AnalystVincent Kardos - AnalystMarvin Fong - AnalystRyan Powell - AnalystOperatorGood day and welcome to the CarGurus earnings call. Please note that this event is being recorded. I would now like to turn the ...

CarGurus (NasdaqGS:CARG) Q3 2025 Earnings Call November 06, 2025 05:00 PM ET Speaker1Good day and welcome to the CarGurus Earnings Call. Please note that this event is being recorded. I would now like to turn the conference over to Kirndeep Singh, Vice President and Head of Investor Relations. Please go ahead.Speaker2Thank you, Operator. Good afternoon. I'm delighted to welcome you to CarGurus' Third Quarter 2025 Earnings Call. With me on the call today are Jason Trevisan, Chief Executive Officer, and Sam Z ...

Core Insights - CarGurus reported a 14% year-over-year growth in Marketplace revenue, reaching $232 million, which exceeded the midpoint of guidance [1] - The company achieved a GAAP operating income of $64.1 million and a Non-GAAP Adjusted EBITDA of $82.4 million, reflecting an 18% increase year-over-year [1] - The firm has repurchased $111 million worth of shares since initiating its buyback program in December 2022, representing 23% of shares outstanding [1] Financial Performance - Marketplace Revenue for Q3 2025 was $231.7 million, a 14% increase from the previous year, while total revenue increased by 3% to $238.7 million [4] - Gross profit rose to $213.5 million, marking a 17% increase, with a gross margin of 89%, up 1,055 basis points year-over-year [4] - GAAP Net Income for Q3 2025 was $44.7 million, a 99% increase compared to the same quarter last year, with a net income margin of 19% [4] Key Performance Indicators - The number of U.S. paying dealers increased by 5% to 25,743, while international paying dealers grew by 11% to 7,930, resulting in a total of 33,673 paying dealers, a 6% increase [9] - The U.S. QARSD (Quarterly Average Revenue per Selling Dealer) was $7,742, an 8% increase, while international QARSD was $2,375, a 15% increase [9] - The U.S. Marketplace Segment Revenue was $210.4 million, a 12% increase, with operating income of $61.0 million, reflecting a 21% increase year-over-year [9] Shareholder Returns - The company repurchased $111 million in shares during Q3 2025, contributing to a total of 23% of shares outstanding repurchased since the buyback program began [1] - Non-GAAP earnings per share guidance for Q4 2025 is projected to be between $0.61 and $0.67 [12] Future Guidance - For Q4 2025, CarGurus expects Marketplace Revenue to be between $236 million and $241 million, with Non-GAAP Adjusted EBITDA projected between $83 million and $91 million [12] - Full-year 2025 guidance estimates Marketplace Revenue between $902 million and $907 million, with Non-GAAP Adjusted EBITDA expected to be between $313 million and $321 million [14]

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]

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]