Core Insights - The eighth annual U.S. Consumer Insights Report by CarGurus reveals that shoppers are increasingly blending online convenience with in-person guidance, utilizing AI and mobile tools to enhance their car buying and selling experience [1][2]. Consumer Behavior Trends - The study surveyed over 3,000 recent car buyers and sellers, highlighting a shift in consumer behavior, motivations, and research habits, with a notable increase in satisfaction despite economic challenges [2]. - Comfort with online car shopping has reached an all-time high, with 83% of consumers preferring to conduct more activities from home, up from 72% in 2022 [6]. - A majority of consumers (86%) still prefer to see the vehicle in person before making a purchase, emphasizing the importance of in-person interactions for test drives, price negotiations, and assessing reliability [6]. Digital Tool Adoption - CarGurus users show a high openness to AI, with 88% benefiting from AI-powered tools like the Discover tool for vehicle research and comparisons [3]. - Over half (54%) of consumers use mobile devices more than desktops for their car shopping, with Gen X being the most mobile-oriented demographic at 60% [3]. Market Dynamics - Consumers are considering a wider range of makes and models, with 53% now considering three or more brands, an increase from 43% in 2024 [6]. - The percentage of shoppers visiting two or more dealerships has risen to 61% in 2025, up from 54% in 2024 [6]. Economic Influences - Economic factors have influenced 73% of respondents' buying/selling decisions, leading 31% to opt for used vehicles over new ones, and 23% to delay their purchasing process [6]. - Despite these influences, transaction timelines remain consistent, with over 80% of buyers and 86% of sellers completing their transactions in under a month [6]. Personalization in Car Buying - The motivation for car purchases has evolved, with "treating myself" rising to the third most common reason in 2025, reflecting a growing personal connection to vehicles [6]. - A significant 69% of respondents believe a car reflects their identity, an increase from 49% in 2022, indicating a shift towards more personalized car buying experiences [6].

Core Insights - The Q3 earnings season has been challenging for many companies, especially small- and mid-cap growth stocks due to tough macroeconomic conditions and high valuations leading to a risk-off sentiment in the markets [1] Group 1: Market Conditions - The current macroeconomic environment is difficult, contributing to a general risk-off attitude among investors [1] - Smaller-cap stocks are facing uncertainty, which is exacerbated by high valuations [1] Group 2: Analyst Background - Gary Alexander has extensive experience covering technology companies and has worked in Silicon Valley, providing insights into current industry themes [1] - He has been a contributor to Seeking Alpha since 2017 and has been quoted in various publications, indicating a strong presence in the investment community [1]

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]

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]

Core Insights - CarGurus reported revenue of $238.7 million for Q3 2025, a year-over-year increase of 3.2% and an EPS of $0.57 compared to $0.45 a year ago, exceeding Zacks Consensus Estimates for both revenue and EPS [1][2] Financial Performance - Revenue for the Marketplace segment was $231.65 million, surpassing the average estimate of $230.89 million, with a year-over-year growth of 13.5% [4] - Revenue from the Wholesale segment was $2.25 million, slightly above the average estimate of $2.2 million, but showed a significant year-over-year decline of 81.4% [4] - Product revenue was reported at $4.79 million, exceeding the average estimate of $2.01 million, reflecting a year-over-year decrease of 68.5% [4] Dealer Metrics - The number of Paying Dealers in the U.S. was 25,743, slightly below the estimated 25,756 [4] - International Paying Dealers totaled 7,930, exceeding the estimate of 7,638 [4] - Total Paying Dealers reached 33,673, above the average estimate of 33,394 [4] - Quarterly Average Revenue per Subscribing Dealer (QARSD) for the consolidated segment was $6,492, slightly below the estimate of $6,500.48 [4] - QARSD for International dealers was $2,375, above the estimate of $2,249.07, while for U.S. dealers it was $7,742, slightly above the estimate of $7,736.47 [4] Stock Performance - CarGurus shares have returned -2% over the past month, while the Zacks S&P 500 composite increased by 1.3% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market [3]

Core Insights - CarGurus reported quarterly earnings of $0.57 per share, exceeding the Zacks Consensus Estimate of $0.55 per share, and up from $0.45 per share a year ago, representing an earnings surprise of +3.64% [1] - The company achieved revenues of $238.7 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 1.27% and increasing from $231.36 million year-over-year [2] - CarGurus has consistently surpassed consensus EPS estimates over the last four quarters, achieving this four times [2] Financial Performance - The earnings surprise for the previous quarter was +5.56%, with actual earnings of $0.57 compared to an expected $0.54 [1] - The current consensus EPS estimate for the upcoming quarter is $0.60, with projected revenues of $237.28 million, and for the current fiscal year, the estimate is $2.17 on revenues of $932.17 million [7] Market Position - CarGurus shares have underperformed the market, losing about 6.8% since the beginning of the year, while the S&P 500 has gained 15.6% [3] - The Zacks Industry Rank places the Internet - Commerce sector in the bottom 41% of over 250 Zacks industries, indicating potential challenges for stock performance [8] Future Outlook - The sustainability of the stock's price movement will depend on management's commentary during the earnings call and the trends in earnings estimate revisions [3][4] - The current Zacks Rank for CarGurus is 3 (Hold), suggesting that shares are expected to perform in line with the market in the near future [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]

Financial Performance - Marketplace revenue grew by 14% year-over-year[8] - Non-GAAP Marketplace adjusted EBITDA margin was 36%[28] - U S QARSD increased by 7 9% year-over-year[16] - International QARSD increased by 15 5% year-over-year[16] - U S Paying Dealers increased by 4 8% year-over-year[18] - International Paying Dealers increased by 11 3% year-over-year[18] Q4 and Full-Year 2025 Guidance - Q4 2025 Marketplace Revenue is projected to be between $236 million and $241 million[41] - Full-Year 2025 Marketplace Revenue is projected to be between $902 million and $907 million[41] - Q4 2025 Non-GAAP Marketplace Adjusted EBITDA is projected to be between $83 million and $91 million[41] - Full-Year 2025 Non-GAAP Marketplace Adjusted EBITDA is projected to be between $313 million and $321 million[41] - Full-Year 2025 Non-GAAP Earnings Per Share is projected to be between $2 19 and $2 25[41]