GAAP consolidated net income was $13.8 million; Consolidated Adjusted EBITDA was $45.2 million, exceeding high-end of guidance range
Digital Wholesale demonstrated ongoing efficiency in operating metrics
Digital Deal adoption reaches 2,900 dealers with over 250,000 digitally-enabled listings
Marketplace growth expected to accelerate for remainder of 2023
CAMBRIDGE, Mass., Aug. 09, 2023 (GLOBE NEWSWIRE) -- CarGurus, Inc. ( CARG), a multinational, online automotive platform for buying and selling vehicles, today announced financial results for the second quarter ended June 30, 2023.
"We are extremely pleased with our second quarter results as we exceeded our forecasted consolidated adjusted EBITDA guidance for the quarter," said Jason Trevisan, Chief Executive Officer at CarGurus. "The strength of our results came from growth in our Marketplace business which was fueled by product adoption and enhanced monetization strategies targeting both new and existing dealers. Concurrently, we took measures to improve our Digital Wholesale operations to ensure the long-term viability of the advancements made in the first half of this year. We are pleased that our diligent efforts led to segment profitability and higher operating efficiency this quarter. Our progress this quarter underscores our ability to respond to dynamic conditions internally and externally, all while remaining steadfast in building an online platform that supports both consumer and dealer customers at every stage of the buying and selling journey."
Second Quarter Financial Highlights
- Total revenue of $239.7 million, a decrease of (53)% year-over-year.
- Marketplace revenue was $171.0 million, an increase of 4% year-over-year.
- Wholesale revenue was $32.0 million, a decrease of (58)% year-over-year.
- Product revenue was $36.8 million, a decrease of (86)% year-over-year.
- GAAP consolidated net income of $13.8 million, a decrease of (23)% year-over-year; non-GAAP consolidated net income of $33.8 million, a decrease of (24)% year-over-year.
- GAAP net income attributable to common stockholders of $16.4 million, or $0.12 per fully diluted share, an increase of 259% year-over-year; non-GAAP net income attributable to common stockholders of $33.0 million, or $0.29 per fully diluted share, a decrease of (13)% year-over-year.
- Consolidated Adjusted EBITDA, a non-GAAP metric, of $45.2 million, a decrease of (26)% year-over-year.
- Adjusted EBITDA, a non-GAAP metric, of $43.7 million, a decrease of (19)% year-over-year.
- Cash, cash equivalents, and short-term investments of $453.6 million and an available $399.3 million under its revolving credit facility.
Second Quarter Business Metrics(1)(2)(3)
- U.S. Marketplace segment revenue was $158.4 million, an increase of 4% year-over-year. U.S. Marketplace segment operating income was $24.6 million, a decrease of (13)% year-over-year.
- Digital Wholesale segment revenue was $68.8 million, a decrease of (80)% year-over-year. Digital Wholesale segment operating loss was $(6.3) million, an increase of 139% year-over-year.
- Total paying dealers were 31,097 as of June 30, 2023, roughly flat year-over-year. Of the total paying dealers as of June 30, 2023, U.S. and International accounted for 24,220 and 6,877, respectively, a decrease of (1)% and an increase of 3%, respectively, year-over-year.
- Quarterly Average Revenue per Subscribing Dealer (“QARSD”) in the U.S. was $6,110 as of June 30, 2023, an increase of 6% year-over-year. QARSD in International markets was $1,610 as of June 30, 2023, an increase of 5% year-over-year.
- Website traffic and consumer engagement metrics for the second quarter of 2023 were as follows:
- U.S. average monthly unique users were 31.9 million, an increase of 8% year-over-year.
- U.S. average monthly sessions were 84.4 million, an increase of 5% year-over-year.
- International average monthly unique users were 7.4 million, an increase of 12% year-over-year.
- International average monthly sessions were 17.1 million, an increase of 15% year-over-year.
- Transactions were 20,793, a decrease of (68)% year-over-year.
| (1) | CarOffer website is excluded from the metrics presented for users and sessions. |
| (2) | Effective as of the fourth quarter of 2022 the Company revised its segment reporting from one reportable segment to two reportable segments, U.S. Marketplace and Digital Wholesale. The change in segment reporting was a triggering event for an evaluation of goodwill impairment. As such, the Company evaluated for goodwill impairment on December 31, 2022, and did not identify any impairment to its goodwill. The change in segment reporting was made to align with financial reporting results regularly provided to the Company's chief operating decision maker ("CODM") to assess the business. The CODM reviews segment revenue and segment income (loss) from operations as a proxy for the performance of the Company’s operations. The U.S. Marketplace segment derives revenues from marketplace services from customers within the United States. The Digital Wholesale segment derives revenues from Dealer-to-Dealer and Instant Max Cash Offer services and products which are sold on the CarOffer platform. The Company also has two operating segments which are individually immaterial and therefore aggregated into the Other category to reconcile reportable segments to the Unaudited Condensed Consolidated Income Statements. The Other category derives revenues from marketplace services from customers outside of the United States. |
| (3) | For the year ended December 31, 2022, Digital Wholesale segment income (loss) from operations did not reflect certain Dealer-to-Dealer and Instant Max Cash Offer ("IMCO") related capitalized website development amortization incurred by the U.S. Marketplace segment. During the three months ended March 31, 2023, the Company updated Digital Wholesale segment income (loss) from operations to reflect certain Dealer-to-Dealer and IMCO related capitalized website development amortization incurred by the U.S. Marketplace segment and accordingly updated Digital Wholesale segment income (loss) from operations for the three months ended June 30, 2022 for comparative purposes. |
Third Quarter 2023 Guidance
CarGurus anticipates total revenue, product revenue, non-GAAP Consolidated Adjusted EBITDA, and non-GAAP earnings per share ("EPS") to be in the following ranges for the third quarter 2023:
| • Total revenue | $201 million to $221 million | |
| • Product revenue | $15 million to $25 million | |
| • Non-GAAP Consolidated Adjusted EBITDA | $36 million to $44 million | |
| • Non-GAAP EPS | $0.24 to $0.27 |
The third quarter 2023 non-GAAP EPS calculation assumes 114.5 million diluted weighted-average common shares outstanding. This estimated number of shares outstanding excludes the potential dilution from CarGurus utilizing its equity as the sole form of consideration to purchase the remaining 49% interest in CarOffer.
The assumptions that are built into guidance for the third quarter 2023 regarding our pace of paid dealer acquisition, churn, and expansion activity for the relevant period are based on recent market behaviors and industry conditions. Guidance for the third quarter 2023 excludes macro-level industry issues that result in dealers and consumers materially changing their recent market behaviors or that cause us to enact measures to assist dealers. Guidance also excludes adjustments to the carrying value of redeemable noncontrolling interests resulting from potential changes in the redemption value of such interests, and any potential impact of foreign currency exchange gains or losses.
CarGurus has not reconciled its guidance of non-GAAP consolidated adjusted EBITDA to GAAP consolidated net income or non-GAAP consolidated EPS to GAAP consolidated EPS because the reconciling items between such GAAP and non-GAAP financial measures, which include, as applicable, stock-based compensation, amortization of intangible assets, impairment of long-lived assets, depreciation expenses, non-intangible amortization, other (income) expense, net, the provision for income taxes, income tax effects, and adjustments to the carrying value of redeemable noncontrolling interests resulting from changes in the redemption value of such interests, cannot be reasonably predicted due to, as applicable, the timing, amount, valuation and number of future employee equity awards, and the uncertainty relating to the timing, frequency, and effect of acquisitions and the significance of the resulting acquisition-related expenses, including adjustments to the carrying value of redeemable noncontrolling interests resulting from potential changes in the redemption value of such interests, and therefore cannot be determined without unreasonable effort. For more information regarding the non-GAAP financial measures discussed in this press release, please see the reconciliations of GAAP financial measures to non-GAAP financial measures and the section titled “Non-GAAP Financial Measures and Other Business Metrics” below.
Conference Call and Webcast Information
CarGurus will host a conference call and live webcast to discuss its second quarter 2023 financial results and business outlook at 5:00 p.m. Eastern Time today, August 9, 2023. To access the conference call, dial (844) 826-3035 for callers in the U.S. or Canada, or (412) 317-5195 for international callers. The webcast will be available live on the Investors section of CarGurus’ website at https://investors.cargurus.com.
An audio replay of the call will also be available to investors beginning at approximately 8:00 p.m. Eastern Time today, August 9, 2023, until 11:59 p.m. Eastern Time on August 16, 2023, by dialing (844) 512-2921 for callers in the U.S. or Canada, or (412) 317-6671 for international callers, and entering passcode 10181700. In addition, an archived webcast will be available on the Investors section of CarGurus’ website at https://investors.cargurus.com.
About CarGurus
CarGurus ( CARG) is a multinational, online automotive platform for buying and selling vehicles that is building upon its industry-leading listings marketplace with both digital retail solutions and the CarOffer digital wholesale platform. The CarGurus platform gives consumers the confidence to purchase and/or sell a vehicle either online or in-person, and it gives dealerships the power to accurately price, effectively market, instantly acquire, and quickly sell vehicles, all with a nationwide reach. The Company uses proprietary technology, search algorithms, and data analytics to bring trust, transparency, and competitive pricing to the automotive shopping experience. CarGurus is the most visited automotive shopping site in the U.S.1
1Source: SimilarWeb: Traffic Report, Q2 2023, U.S.
CarGurus also operates online marketplaces under the CarGurus brand in Canada and the United Kingdom. In the United States and the United Kingdom, CarGurus also operates the Autolist and PistonHeads online marketplaces, respectively, as independent brands.
To learn more about CarGurus, visit www.cargurus.com, and for more information about CarOffer, visit www.caroffer.com.
CarGurus® is a registered trademark of CarGurus, Inc., and CarOffer® is a registered trademark of CarOffer, LLC. All other product names, trademarks and registered trademarks are property of their respective owners.
© 2023 CarGurus, Inc., All Rights Reserved.
Cautionary Language Concerning Forward-Looking Statements
This press release includes forward-looking statements. Other than statements of historical facts, all statements contained in this press release, including, without limitation, statements regarding our future financial and business performance for the third quarter 2023; our ability to quickly make transformations necessary for our business to achieve long-term goals; and the impact of macro-level issues on our industry, business, and financial results, are forward-looking statements. The words “aim,” “anticipate,” “believe,” “could,” “estimate,” “expect,” “goal,” “guide,” “intend,” “may,” “might,” “plan,” “potential,” “predicts,” “projects,” “seeks,” “should,” “target,” “will,” “would,” and similar expressions and their negatives are intended to identify forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. You should not place undue reliance on these statements. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those reflected in such statements, including, without limitation, risks related to our growth and our ability to grow our revenue; our relationships with dealers; competition in the markets in which we operate; market growth; our ability to innovate; our ability to realize benefits from our acquisitions and successfully implement the integration strategies in connection therewith; global supply chain challenges, increased inflation and interest rates, and other macroeconomic issues; the material weakness identified in our internal controls over financial reporting; changes in our key personnel; natural disasters, epidemics or pandemics; and our ability to operate in compliance with applicable laws, as well as other risks and uncertainties as may be detailed from time to time in our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q and other reports we file with the U.S. Securities and Exchange Commission. Moreover, we operate in very competitive and rapidly changing environments. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, we cannot guarantee that future results, levels of activity, performance, achievements, or events and circumstances reflected in the forward-looking statements will occur. We are under no duty to update any of these forward-looking statements after the date of this press release to conform these statements to actual results or revised expectations, except as required by law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this press release.
Investor Contact:
Kirndeep SinghVice President, Investor Relations
[email protected]
Unaudited Condensed Consolidated Balance Sheets
(in thousands, except share and per share data) | As of June 30, 2023 | As of December 31, 2022 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 363,060 | $ | 469,517 | ||||
| Short-term investments | 90,490 | — | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $807 and $1,809, respectively | 37,820 | 46,817 | ||||||
| Inventory | 541 | 5,282 | ||||||
| Prepaid expenses, prepaid income taxes and other current assets | 21,742 | 21,972 | ||||||
| Deferred contract costs | 10,078 | 8,541 | ||||||
| Restricted cash | 11,561 | 5,237 | ||||||
| Total current assets | 535,292 | 557,366 | ||||||
| Property and equipment, net | 48,243 | 40,128 | ||||||
| Intangible assets, net | 38,037 | 53,054 | ||||||
| Goodwill | 157,638 | 157,467 | ||||||
| Operating lease right-of-use assets | 189,905 | 56,869 | ||||||
| Restricted cash | — | 9,378 | ||||||
| Deferred tax assets | 51,888 | 35,488 | ||||||
| Deferred contract costs, net of current portion | 11,490 | 8,853 | ||||||
| Other non-current assets | 7,828 | 8,499 | ||||||
| Total assets | $ | 1,040,321 | $ | 927,102 | ||||
| Liabilities, redeemable noncontrolling interest and stockholders’ equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 39,260 | $ | 32,529 | ||||
| Accrued expenses, accrued income taxes and other current liabilities | 36,367 | 39,193 | ||||||
| Deferred revenue | 21,267 | 12,249 | ||||||
| Operating lease liabilities | 13,870 | 14,762 | ||||||
| Total current liabilities | 110,764 | 98,733 | ||||||
| Operating lease liabilities | 193,184 | 51,656 | ||||||
| Deferred tax liabilities | 43 | 54 | ||||||
| Other non–current liabilities | 5,611 | 5,301 | ||||||
| Total liabilities | 309,602 | 155,744 | ||||||
| Redeemable noncontrolling interest | 29,865 | 36,749 | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $0.001 par value per share; 10,000,000 shares authorized; no shares issued and outstanding | — | — | ||||||
| Class A common stock, $0.001 par value per share; 500,000,000 shares authorized; 97,426,273 and 101,636,649 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively | 97 | 102 | ||||||
| Class B common stock, $0.001 par value per share; 100,000,000 shares authorized; 15,999,173 and 15,999,173 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively | 16 | 16 | ||||||
| Additional paid-in capital | 346,494 | 413,092 | ||||||
| Retained earnings | 355,588 | 323,043 | ||||||
| Accumulated other comprehensive loss | (1,341 | ) | (1,644 | ) | ||||
| Total stockholders’ equity | 700,854 | 734,609 | ||||||
| Total liabilities, redeemable noncontrolling interest and stockholders’ equity | $ | 1,040,321 | $ | 927,102 | ||||
Unaudited Condensed Consolidated Income Statements
(in thousands, except share and per share data) | Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue | ||||||||||||||||
| Marketplace | $ | 170,950 | $ | 163,926 | $ | 338,077 | $ | 327,215 | ||||||||
| Wholesale | 31,952 | 75,937 | 57,138 | 166,931 | ||||||||||||
| Product | 36,835 | 271,366 | 76,485 | 447,691 | ||||||||||||
| Total revenue | 239,737 | 511,229 | 471,700 | 941,837 | ||||||||||||
| Cost of revenue(1) | ||||||||||||||||
| Marketplace | 15,474 | 13,257 | 31,007 | 25,466 | ||||||||||||
| Wholesale | 24,428 | 46,518 | 46,496 | 104,700 | ||||||||||||
| Product | 35,694 | 263,603 | 75,076 | 441,945 | ||||||||||||
| Total cost of revenue | 75,596 | 323,378 | 152,579 | 572,111 | ||||||||||||
| Gross profit | 164,141 | 187,851 | 319,121 | 369,726 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing | 77,838 | 95,605 | 153,415 | 183,186 | ||||||||||||
| Product, technology, and development | 37,391 | 31,354 | 73,998 | 62,007 | ||||||||||||
| General and administrative | 27,267 | 33,514 | 52,186 | 66,635 | ||||||||||||
| Depreciation and amortization | 3,907 | 3,836 | 7,725 | 7,697 | ||||||||||||
| Total operating expenses | 146,403 | 164,309 | 287,324 | 319,525 | ||||||||||||
| Income from operations | 17,738 | 23,542 | 31,797 | 50,201 | ||||||||||||
| Other income (expense), net: | ||||||||||||||||
| Interest income | 4,333 | 311 | 8,076 | 348 | ||||||||||||
| Other income (expense), net | 347 | (467 | ) | 942 | (623 | ) | ||||||||||
| Total other income (expense), net | 4,680 | (156 | ) | 9,018 | (275 | ) | ||||||||||
| Income before income taxes | ||||||||||||||||
