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]

Financial Data and Key Metrics Changes - In Q3 2025, consolidated revenue was $239 million, up 3% year-over-year [28] - Marketplace revenue was $232 million, reflecting a 14% year-over-year increase, driven by subscription-based listings revenue [29] - Non-GAAP gross profit was $214 million, an 11% increase year-over-year, with a non-GAAP gross margin of 90%, up about 650 basis points [30] - Adjusted EBITDA was approximately $79 million, up 21% year-over-year, with an adjusted EBITDA margin of 33%, up about 490 basis points [31] - Non-GAAP diluted earnings per share was $0.57, a 30% increase year-over-year [34] Business Line Data and Key Metrics Changes - U.S. CarSID grew 8% year-over-year, with 1,182 new paying U.S. dealers added [29] - International operations saw revenue growth of 27% year-over-year, with international CarSID up 15% year-over-year [29] - Digital Deal adoption surpassed 12,500 dealers, with significant growth in high-value actions such as financing applications and appointment scheduling [21] Market Data and Key Metrics Changes - The international market is showing strong growth, with CarGurus adding over 800 customers in Canada and the U.K. [54] - The company is maintaining lower pricing in international markets to build market share before increasing prices over time [54] Company Strategy and Development Direction - The company is focused on expanding its suite of data-driven solutions across dealer workflows to enhance profitability [11] - CarGurus aims to deepen monetization through scalable software and data solutions, expanding its addressable market significantly [9][10] - The strategy includes enhancing consumer engagement through innovations like CG Discover and Dealership Mode, which aim to streamline the car buying journey [16][17] 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 [37] - The company anticipates fourth-quarter marketplace revenue to be between $236 million and $241 million, representing a year-over-year increase of 12% to 15% [35] - Management highlighted the importance of maintaining a balance between innovation and disciplined execution to ensure sustainable growth [80] Other Important Information - The company is winding down the CarOffer transactions business, which will be accounted for as a discontinued operation in Q4 [30] - Total wind-down-related charges are expected to be in the range of $13 million to $15 million, lower than previously estimated [33] 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 towards those offering the best ROI [41] Question: How is the ROI for Digital Deal perceived by dealers? - Management indicated that more consumers are engaging in high-value actions, which drives higher quality leads and further ROI for dealers, suggesting potential for future pricing power [45] Question: What are the growth prospects in international markets? - Management expressed pride in international growth, emphasizing the strategy of maintaining lower prices to build market share before increasing them over time [54] Question: How does CarSID growth relate to dealer rooftops? - Management explained that CarSID growth is mathematically related to the number of rooftops, with recent growth in rooftops acting as a headwind to CarSID growth [67] Question: What insights are generated from Dealership Mode? - Management highlighted that Dealership Mode provides valuable insights into consumer behavior at dealerships, enhancing the understanding of customer engagement [82]

Financial Data and Key Metrics Changes - In Q3 2025, consolidated revenue was $239 million, up 3% year-over-year [28] - Marketplace revenue was $232 million, reflecting a 14% year-over-year increase, driven by subscription-based listings revenue [29] - Non-GAAP gross profit was $214 million, up 11% year-over-year, with a non-GAAP gross margin of 90% [30] - Adjusted EBITDA was approximately $79 million, up 21% year-over-year, with an Adjusted EBITDA margin of 33% [31] - Non-GAAP diluted earnings per share was $0.57, reflecting a 30% year-over-year increase [34] Business Line Data and Key Metrics Changes - U.S. CarSID grew 8% year-over-year, with 1,182 new paying U.S. dealers added [29] - International operations saw revenue growth of 27% year-over-year, with international CarSID up 15% year-over-year [29] - Digital Deal adoption surpassed 12,500 dealers, with significant growth in high-value actions such as financing applications and deposits [21] Market Data and Key Metrics Changes - The international market is showing strong growth, with CarGurus adding over 800 customers in Canada and the UK [53] - The company is maintaining lower pricing in international markets to build market share before increasing prices [52] Company Strategy and Development Direction - The company is focused on expanding its suite of data-driven solutions across dealer workflows to enhance profitability [11] - CarGurus aims to deepen monetization through scalable software and data solutions, expanding its addressable market significantly [9][10] - The strategy includes leveraging AI capabilities to enhance dealer performance and consumer experience [24][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of the marketplace and the early results of new product investments [36] - The company anticipates continued growth in both U.S. and international markets, with a focus on innovation and AI-driven solutions [37] - Management highlighted the importance of building trust and transparency in the consumer journey to enhance engagement [10][17] Other Important Information - The company is winding down the CarOffer transactions business, which is expected to impact revenue from digital wholesale going forward [30] - Cash and cash equivalents at the end of the quarter were $179 million, down from the previous quarter due to share repurchases [34] 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 towards those offering better ROI [41] Question: How is the ROI for Digital Deal perceived by dealers? - Management indicated that more consumers are engaging in high-value actions, which drives higher quality leads and further ROI for dealers, presenting an opportunity for future pricing power [44][45] Question: What is the growth potential in international markets? - Management expressed pride in international growth and indicated that they are strategically keeping prices lower to build market share before increasing them [52][54] 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 [66] Question: What insights are gained from CG Discover? - Management highlighted that CG Discover provides a conversational experience that enhances user engagement and leads to higher conversion rates [72][75]

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]

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]