Cargurus ((CARG)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call from CarGurus conveyed a predominantly positive sentiment, underscoring robust revenue growth, successful international expansion, and innovative product developments. Despite facing challenges such as the wind down of CarOffer and potential impacts from cookie consent regulations, the company’s achievements significantly outshone these hurdles, painting an optimistic picture for stakeholders.
Strong Marketplace Revenue Growth
CarGurus reported a commendable 14% year-over-year growth in marketplace revenue. This increase was primarily driven by dealer upgrades, broader adoption of add-on products, and enhanced lead quality, reflecting the company’s strategic focus on strengthening its core offerings.
International Expansion Success
The company’s international operations experienced a remarkable 27% revenue growth year-over-year, with Canada and the U.K. making significant contributions. This expansion underscores CarGurus’ successful penetration into international markets, bolstering its global presence.
Introduction of PriceVantage
CarGurus launched PriceVantage, a machine learning-based pricing tool, which has led to improved dealer profitability and faster inventory turnover. This innovation highlights the company’s commitment to leveraging technology to enhance dealer experiences and operational efficiency.
Expanded Dealer Network
The company added 1,989 net new dealers globally year-over-year, supported by stronger retention rates. This expansion of the dealer network is a testament to CarGurus’ ability to attract and retain partners, further solidifying its market position.
Increased AI Utilization
An impressive 91% of CarGurus employees report using AI weekly, which has driven faster execution, sharper insights, and greater collaboration. This widespread adoption of AI tools reflects the company’s innovative culture and its focus on operational excellence.
Positive Financial Performance
CarGurus achieved a 21% increase in adjusted EBITDA year-over-year, alongside a non-GAAP gross margin increase of about 650 basis points. These financial metrics highlight the company’s strong performance and effective cost management strategies.
CarOffer Wind Down
The decision to wind down the CarOffer transactions business resulted in a $4 million loss in the third quarter. While this move presented a financial setback, it aligns with CarGurus’ strategic realignment efforts.
Cookie Consent Regulation Impact
CarGurus anticipates a decline in reported uniques and sessions due to changes in cookie consent regulations. This expected impact reflects the broader industry challenges related to evolving data privacy norms.
Forward-Looking Guidance
Looking ahead, CarGurus provided robust guidance for the fourth quarter of 2025, expecting marketplace revenue to be between $236 million and $241 million, marking a 12% to 15% year-over-year growth. The full-year projections indicate a 13% to 14% increase in marketplace revenue, with adjusted EBITDA expected to grow by 18% to 21%. These forecasts underscore CarGurus’ strategic focus on expanding its marketplace and enhancing product offerings to sustain long-term growth.
In summary, CarGurus’ earnings call highlighted a positive outlook with significant achievements in revenue growth, international expansion, and product innovation. Despite some challenges, the company’s strategic initiatives and forward-looking guidance reflect a strong trajectory, promising continued success in the coming quarters.