CarGurus(CARG) - 2024 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company ended the first quarter at the high end of its forecasted revenue, with consolidated revenue of $216 million, down 7% year-over-year, primarily due to lower wholesale and product volumes [33] - Non-GAAP consolidated adjusted EBITDA grew 24% year-over-year, achieving the highest first quarter EBITDA margin in the last three years [8][57] - Non-GAAP gross profit was$ 176 million, up 10% year-over-year, with a non-GAAP gross margin of 82%, up from 69% in the prior year quarter [36] Business Line Data and Key Metrics Changes - Marketplace revenue was $187 million for the first quarter, up 12% year-over-year, driven by continued strength in subscriptions, with net new monthly recurring revenue (MRR) growing 28% year-over-year [54] - Wholesale revenue was$ 16 million for the first quarter, down 36% year-over-year, due to a decline in dealer-to-dealer transaction volume [55] - Product revenue was $12 million for the first quarter, down 69% year-over-year, reflecting a decline in Instant Max Cash Offer transactions [35] Market Data and Key Metrics Changes - International QARSD achieved the strongest year-over-year growth since the first quarter of 2022, reflecting positive momentum in renewals in the UK and Canada [34] - The company reported a 30% year-over-year growth in available listings, ending the quarter with approximately 20% more available inventory than its next closest automotive competitor [49] Company Strategy and Development Direction - The guiding principle for 2024 is "intelligent acceleration," focusing on leveraging the marketplace business and integrated data ecosystem to grow profitably [7] - The company aims to provide more value to dealers, improve consumer experience, enable digital transactions, and rebuild digital wholesale [9] - The introduction of new products and insights, such as the inventory acquisition recommendations tool, is expected to enhance dealer performance and retention [46][52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing growth of the marketplace business, expecting second quarter revenue to be in the range of$ 202 million to $222 million, with continued momentum in QARSD and dealer count [38][89] - The company is optimistic about the international markets, reporting a 24% revenue growth year-over-year and plans to launch new products to capitalize on this segment [90] Other Important Information - The app continues to be the number one automotive app in terms of downloads, generating more than a quarter of total leads, with app users averaging more than three sessions per week [28] - The company ended the first quarter with$ 246 million in cash and cash equivalents, a decrease of $66 million from the end of the fourth quarter, primarily due to share repurchases [58] Q&A Session Summary Question: Can you help us unpack the 30% inventory lift you saw in the quarter? - Management indicated that the inventory expansion was driven by market macro increases and decreases, with a modest growth in paying dealers [19] Question: Can you talk about the investments you're making in marketing with the core app infrastructure? - The focus is on product and tech improvements, with significant results seen in app engagement and features [20] Question: Can you share the monthly trend if you saw strength building throughout the quarter? - Management noted that they do not discuss current quarter trends but highlighted strong performance in the first quarter [106] Question: How should we think about the sustainability of QARSD growth over the next several quarters? - Management expressed confidence in the sustainability of QARSD growth, driven by new dealer acquisitions and upgrades to higher subscription tiers [98] Question: What are the expectations for the international business in the next few quarters? - Management is optimistic about international growth, with plans to launch new products and expand partnerships [90]