Core Insights - CarGurus, Inc. reported better-than-expected third-quarter financial results and provided FY24 guidance with EPS expectations above estimates [1][2] Financial Performance - The company reported quarterly earnings of $0.45 per share, surpassing the analyst consensus estimate of $0.42 [2] - Quarterly sales reached $231.358 million, exceeding the analyst consensus estimate of $223.537 million [2] Management Commentary - CEO Jason Trevisan highlighted the acceleration in Marketplace revenue growth and the company's focus on cost efficiency, which contributed to operating efficiencies [2] - The company aims to enhance its value proposition for dealer partners through actionable insights and tools, driving adoption and retention on its platform [2] Future Guidance - For FY2024, CarGurus expects adjusted EPS in the range of $1.67 to $1.73, compared to estimates of $1.64 [2] - Projected sales for FY2024 are between $885 million and $905 million, slightly above the previous estimate of $883.61 million [2] Stock Performance - Following the earnings announcement, CarGurus shares increased by 4.9%, trading at $35.00 [2] Analyst Ratings and Price Targets - Oppenheimer analyst Jed Kelly maintained an Outperform rating and raised the price target from $32 to $44 [2] - DA Davidson analyst Tom White maintained a Neutral rating and increased the price target from $26.5 to $38.5 [2] - JP Morgan analyst Rajat Gupta maintained an Overweight rating and raised the price target from $36 to $40 [2] - Needham analyst Chris Pierce maintained a Buy rating and increased the price target from $27 to $39 [2] - The consensus price target for CarGurus is $32.7 based on ratings from 16 analysts, with a high of $44 and a low of $15 [3]

Core Viewpoint - CarGurus reported a revenue of $231.36 million for Q3 2024, marking a 5.4% year-over-year increase and exceeding the Zacks Consensus Estimate by 3.75% [1] Financial Performance - Earnings per share (EPS) for the quarter was $0.45, up from $0.34 a year ago, representing a surprise of 7.14% compared to the consensus estimate of $0.42 [1] - Total paying dealers reached 31,684, slightly above the average estimate of 31,542 [3] - U.S. paying dealers numbered 24,561, compared to the estimated 24,534 [3] - International paying dealers totaled 7,123, exceeding the average estimate of 6,946 [3] Revenue Breakdown - Marketplace revenue was reported at $204.02 million, surpassing the estimated $201.52 million, reflecting a 14.7% increase year-over-year [3] - Wholesale revenue was $12.11 million, slightly above the average estimate of $11.86 million, but down 44.3% year-over-year [3] - Product revenue reached $15.23 million, significantly higher than the estimated $9.13 million, but down 23% year-over-year [3] Stock Performance - CarGurus shares have increased by 7.7% over the past month, outperforming the Zacks S&P 500 composite, which rose by 3.2% [4] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance in the near term [4]

Company Performance - CarGurus reported quarterly earnings of $0.45 per share, exceeding the Zacks Consensus Estimate of $0.42 per share, and up from $0.34 per share a year ago, representing an earnings surprise of 7.14% [1] - The company posted revenues of $231.36 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 3.75%, and an increase from year-ago revenues of $219.42 million [2] - Over the last four quarters, CarGurus has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Stock Performance - CarGurus shares have increased approximately 36.1% since the beginning of the year, compared to the S&P 500's gain of 24.3% [3] - The current consensus EPS estimate for the coming quarter is $0.46 on revenues of $224.77 million, and for the current fiscal year, it is $1.61 on revenues of $882.21 million [7] Industry Outlook - The Automotive - Replacement Parts industry, to which CarGurus belongs, is currently ranked in the bottom 33% of over 250 Zacks industries, indicating potential challenges ahead [8] - The outlook for the industry can significantly impact the performance of CarGurus stock, as research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Financial Performance - For the three months ended September 30, 2024, CarGurus generated revenue of $231.4 million, a 5% increase from $219.4 million for the same period in 2023[137]. - For the nine months ended September 30, 2024, CarGurus generated revenue of $665.8 million, a 4% decrease from $691.1 million for the same period in 2023[139]. - Consolidated net income for the three months ended September 30, 2024, was $22.5 million, up from $19.0 million for the same period in 2023[137]. - Consolidated Adjusted EBITDA for the three months ended September 30, 2024, was $64.9 million, compared to $48.6 million for the same period in 2023[137]. - Consolidated Adjusted EBITDA for the nine months ended September 30, 2024, was $170,836 thousand, an increase from $134,631 thousand in the same period of 2023, representing a growth of about 27%[162]. - The company reported a total operating loss of $39,866 thousand for the nine months ended September 30, 2024, compared to an income of $54,892 thousand for the same period in 2023[201]. Revenue Breakdown - Marketplace revenue increased by $26,110 thousand, or 15%, to $204,019 thousand, representing 88% of total revenue for the three months ended September 30, 2024[207]. - Wholesale revenue decreased by $9,628 thousand, or 44%, to $12,107 thousand, accounting for 5% of total revenue for the three months ended September 30, 2024[208]. - Digital Wholesale segment revenue decreased to $27,339 thousand for the three months ended September 30, 2024, from $41,510 thousand in 2023, representing 12% of total revenue[203]. - Product revenue decreased by $4.5 million, or 23%, for the three months ended September 30, 2024, representing 7% of total revenue compared to 9% in the same period of 2023[209]. - Marketplace revenue increased by $70.4 million, or 14%, for the nine months ended September 30, 2024, representing 88% of total revenue[232]. - Wholesale revenue decreased by $37.5 million, or 48%, for the nine months ended September 30, 2024, representing 6% of total revenue[233]. - Product revenue decreased by $58.2 million, or 60%, for the nine months ended September 30, 2024, representing 6% of total revenue[234]. User Engagement - The average monthly unique users for the U.S. in September 2024 was 32,279 thousand, while international users were 9,861 thousand, totaling 42,140 thousand[144]. - The average monthly sessions for the U.S. in September 2024 was 80,370 thousand, with international sessions at 20,423 thousand, totaling 100,793 thousand[147]. - As of September 2024, the number of paying dealers in the U.S. was 24,561, an increase from 24,368 in September 2023, while international paying dealers rose to 7,123 from 6,823[149]. Expenses and Costs - Operating expenses totaled $155,117 thousand for the three months ended September 30, 2024, up from $141,203 thousand in the same period of 2023[206]. - Sales and marketing expense increased by $4.4 million, or 6%, for the three months ended September 30, 2024, accounting for 35% of total revenue[220]. - General and administrative expense increased by $3.3 million, or 13%, for the three months ended September 30, 2024, representing 12% of total revenue compared to 11% in the prior year[222]. - Goodwill and other asset impairment increased by $7.0 million for the three months ended September 30, 2024, representing 3% of total revenue[223]. - Total other income, net decreased by $4.0 million, or 30%, to $9.2 million for the nine months ended September 30, 2024, compared to $13.2 million for the same period in 2023[248]. Cash Flow and Financing - As of September 30, 2024, the company had cash and cash equivalents of $246.7 million, down from $291.4 million as of December 31, 2023[253]. - The company reported net cash provided by operating activities of $179.8 million for the nine months ended September 30, 2024, despite a consolidated net loss of $24.9 million[263]. - Net cash used in investing activities was $59.3 million for the nine months ended September 30, 2024, primarily due to $64.9 million in property and equipment purchases[265]. - Net cash used in financing activities was $164.3 million for the nine months ended September 30, 2024, mainly due to stock repurchases[267]. - The company entered into a Credit Agreement allowing borrowing up to $400.0 million, with $9.6 million in letters of credit outstanding as of December 31, 2023, reducing borrowing capacity to $390.4 million[258]. Impairments and Adjustments - The company recognized impairment losses of $115.2 million for goodwill and $127.5 million for the Digital Wholesale segment related to the CarOffer reporting unit[190]. - The CG Buy Online pilot was ended, resulting in impairment losses of $15.8 million for property and equipment and $9.8 million for wholesale cost of revenue[191]. - The company identified a triggering event for goodwill impairment testing at the CarOffer reporting unit, leading to a significant impairment charge[280]. Internal Controls and Risks - The company has identified a material weakness in internal control over financial reporting, which has not yet been fully remediated as of September 30, 2024[296]. - Management has implemented or enhanced certain controls to address specific issues related to the material weakness, but remediation will take time[302]. - The company does not expect material fluctuations in interest income from changes in the interest rate environment for the foreseeable future[289]. - The company does not believe inflation has materially affected its business to date, but significant inflationary pressures could harm operating results[291].

Financial Performance - Q3 2024 Marketplace revenue increased by 15% year-over-year to $204.0 million[3] - Consolidated GAAP Net Income for Q3 2024 was $22.5 million, up 19% year-over-year[3] - Non-GAAP Consolidated Adjusted EBITDA reached $64.9 million, reflecting a 33% increase year-over-year[3] - Total revenue for Q3 2024 was $231.4 million, a 5% increase compared to the previous year[3] - The company reported a consolidated net income of $22.51 million for the three months ended September 30, 2024, compared to $18.97 million in the same period of 2023[19] - Consolidated net income for the three months ended September 30, 2024, was $22,511,000, an increase from $18,973,000 in the same period of 2023, representing a growth of approximately 18.1%[22] - Non-GAAP consolidated net income for the three months ended September 30, 2024, was $47,058,000, compared to $37,515,000 in the same period of 2023, reflecting a year-over-year increase of about 25.5%[23] - The company experienced a net loss attributable to common stockholders of $24.91 million for the nine months ended September 30, 2024, compared to a net income of $54.85 million in the same period of 2023[19] Revenue Guidance - Fourth Quarter 2024 guidance for total revenue is projected between $219 million and $239 million[6] - Full-Year 2024 guidance for total revenue is estimated to be between $885 million and $905 million[6] Dealer Metrics - U.S. Paying Dealers remained stable at 24,561, a 1% increase year-over-year[5] - International Paying Dealers grew by 4% to 7,123[5] - Quarterly Average Revenue per Subscribing Dealer (QARSD) is calculated based on marketplace revenue divided by the average number of paying dealers, indicating product value and return on investment[46] Cash Flow and Assets - The company reported a net cash provided by operating activities of $56,196,000 for the three months ended September 30, 2024, significantly up from $26,350,000 in the prior year, marking an increase of approximately 113.0%[22] - The company’s cash and cash equivalents were $246.75 million as of September 30, 2024, down from $291.36 million as of December 31, 2023[16] - The cash, cash equivalents, and restricted cash at the end of the period was $250,741,000 as of September 30, 2024, down from $366,954,000 at the end of September 30, 2023[22] - The total current assets decreased to $326.64 million as of September 30, 2024, from $391.19 million as of December 31, 2023[16] Expenses and Impairments - Operating expenses for the three months ended September 30, 2024, totaled $155.12 million, an increase from $141.20 million in the same period of 2023[19] - Total cost of revenue and operating expenses for the three months ended September 30, 2024, was $203,924 thousand, down from $219,379 thousand in the same period last year[31] - The company experienced a goodwill and other asset impairment of $16,776,000 for the three months ended September 30, 2024, while there was no impairment recorded in the same period of 2023[23] - The company recognized a goodwill impairment charge of $127.5 million during the nine months ended September 30, 2024[27] Shareholder Actions - The Board of Directors authorized a $200.0 million share repurchase program for fiscal year 2025[1] Operational Metrics - Monthly unique users and sessions are measured using GA4, with adjustments for accuracy, impacting the understanding of user engagement[48][49] - Average monthly unique users are calculated to assess user experience and brand awareness, crucial for marketplace revenue generation[49] - Monthly sessions are defined as distinct visits including visitor actions, providing insights into consumer satisfaction and engagement[50] - Transactions in the Digital Wholesale segment represent unique vehicles processed, serving as a key business metric for growth and revenue insights[47] Financial Measures - The company aims to enhance transparency with respect to metrics used in financial and operational decision-making through the use of non-GAAP financial measures[36] - Consolidated Adjusted EBITDA and Adjusted EBITDA are key measures for evaluating operating performance and strategic decision-making[43] - Free Cash Flow is defined as cash flow from operations after capital expenditures, indicating financial performance and asset maintenance[44] - Non-GAAP gross profit margin is calculated as non-GAAP gross profit divided by total revenue, providing insights into operational efficiency[39]

Core Insights - CarGurus (CARG) is expected to report quarterly earnings of $0.42 per share, reflecting a 23.5% increase year-over-year [1] - Analysts forecast revenues of $223.01 million, indicating a 1.6% year-over-year growth [1] - The consensus EPS estimate has been adjusted downward by 3.8% over the past 30 days, showing a reassessment by analysts [1] Revenue Estimates - 'Revenue- Marketplace' is projected at $201.52 million, representing a 13.3% year-over-year increase [4] - 'Revenue- Wholesale' is expected to reach $11.86 million, indicating a significant decline of 45.5% from the previous year [4] - 'Revenue- Product' is estimated at $9.13 million, reflecting a decrease of 53.9% compared to the prior-year quarter [4] Dealer Metrics - The consensus estimate for 'Paying Dealers - Total' is 31,542, up from 31,191 a year ago [5] - 'Paying Dealers - U.S' is estimated at 24,534, compared to 24,368 in the same quarter last year [5] - 'Paying Dealers - International' is projected at 6,946, slightly up from 6,823 a year ago [5] Stock Performance - CarGurus shares have increased by 5.1% in the past month, outperforming the Zacks S&P 500 composite, which rose by 0.7% [5] - The company holds a Zacks Rank 4 (Sell), indicating expectations of underperformance relative to the overall market in the near term [5]

Core Insights - CarGurus has launched a new digital retail solution called CarGurus Digital Deal in Canada, aimed at enhancing connections between dealers and purchase-ready shoppers [1][2] - The solution allows consumers to start their financing applications online, book appointments, and initiate trade-ins before visiting the dealership, streamlining the buying process [2][3] Company Overview - CarGurus is a multinational online automotive platform that facilitates buying and selling vehicles, leveraging proprietary technology and data analytics to enhance trust and transparency in the automotive shopping experience [5] - The company operates in multiple countries, including the U.S., U.K., and Canada, and is recognized as the fastest-growing automotive shopping site in Canada [5][6] Product Features - CarGurus Digital Deal enables a three-step process for consumers to build personalized finance applications that are submitted directly to participating dealerships [2][3] - The solution is integrated with dealer finance portal platform CreditApp, allowing customization with dealers' preferred lender networks [3] Market Impact - The introduction of Digital Deal is expected to connect dealers with higher-converting leads, facilitating faster and more efficient sales across over 15,000 vehicle listings in Canada [3] - Dealers have reported that the solution simplifies the buying process and improves engagement with shoppers, leading to higher conversion rates [4]

Core Viewpoint - CarGurus, Inc. will announce its financial results for Q3 2024 on November 7, 2024, after market close, followed by a conference call for investors and analysts [1][2] Company Overview - CarGurus is a leading online automotive platform for buying and selling vehicles, utilizing proprietary technology and data analytics to enhance the automotive shopping experience [3] - The company operates in the U.S., Canada, and the U.K., and is recognized as the most visited automotive shopping site in the U.S. [3][4] - CarGurus also manages independent online marketplaces such as Autolist in the U.S. and PistonHeads in the U.K. [3]

Core Insights - CarGurus has officially opened its new global headquarters in Boston, emphasizing its commitment to the region and modern workplace needs [1][2] - The new office spans approximately 225,000 square feet and consolidates nearly 1,000 employees from two separate locations in Cambridge [2] - The headquarters is designed to foster collaboration and innovation, featuring flexible workspaces and amenities that support a hybrid work culture [3][4] Company Overview - CarGurus is the leading digital platform for buying and selling vehicles, recognized for its industry-leading listings marketplace and digital retail solutions [5] - The company operates in the U.S., Canada, and the U.K., providing a trusted automotive shopping experience through proprietary technology and data analytics [5][6] - CarGurus is noted as the most visited automotive shopping site in the U.S. as of Q2 2024 [5]

Core Insights - The Q3 2024 Quarterly Review by CarGurus highlights a shift in consumer demand towards more affordable vehicles amid economic uncertainty and high interest rates [1][2] Group 1: Consumer Trends - Consumers are becoming more prudent with their spending, leading to increased demand for affordable cars, particularly in the price segments of $20,000 to $30,000 for new vehicles and $15,000 to $20,000 for used vehicles, which accounted for 43% and 59% of annual sales growth respectively [2] - The used car market is seeing significant growth in sales for vehicles priced at $30,000 and under, while sales of cars over $30,000 have declined [2] Group 2: Market Dynamics - Hybrids are outperforming electric vehicles (EVs) in 2024, with new hybrids making up nearly 11% of total retail sales compared to 4% for EVs, and hybrid retail sales volumes have increased by nearly 44% year-over-year [3] - There is a growing inventory of aging new cars on dealer lots, with about 58,000 listings being two years or older, representing a nearly 58% increase compared to pre-COVID averages [3] Group 3: Economic Influences - The upcoming presidential election may negatively impact vehicle sales demand, as historical data shows declines in sales during election years [3] - Recent interest rate cuts are expected to have a muted immediate effect on affordability, as auto loan rates typically follow longer-term treasury rates rather than the short-term Federal Funds Rate [3]