CarGurus’ second quarter results were met with a negative market reaction, despite the company delivering revenue and non-GAAP profit that surpassed Wall Street expectations. Management pointed to strong performance in its core Marketplace segment, highlighting international gains and robust dealer adoption of data-driven tools. CEO Jason Trevisan cited a 14% year-over-year increase in Marketplace revenue and growing dealer engagement with analytics offerings as key drivers. However, the company’s decision to wind down its CarOffer transactions business—citing persistent market volatility and structural limitations—emerged as a focal point, introducing both operational and financial adjustments this quarter.
Is now the time to buy CARG? Find out in our full research report (it’s free).
CarGurus (CARG) Q2 CY2025 Highlights:
- Revenue: $234 million vs analyst estimates of $232.5 million (7% year-on-year growth, 0.7% beat)
- Adjusted EPS: $0.57 vs analyst estimates of $0.55 (4.4% beat)
- Adjusted EBITDA: $77.3 million vs analyst estimates of $74.69 million (33% margin, 3.5% beat)
- Revenue Guidance for Q3 CY2025 is $230.5 million at the midpoint, below analyst estimates of $237.7 million
- Adjusted EPS guidance for Q3 CY2025 is $0.54 at the midpoint, below analyst estimates of $0.55
- EBITDA guidance for Q3 CY2025 is $80.5 million at the midpoint, above analyst estimates of $74.11 million
- Operating Margin: 10.6%, up from -42.8% in the same quarter last year
- Paying Dealers: 33,095, up 1,743 year on year
- Market Capitalization: $3.19 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From CarGurus’s Q2 Earnings Call
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Christopher Alan Pierce (Needham & Company) asked about the white space for dealer count and revenue per dealer growth; CEO Jason Trevisan emphasized substantial runway for both core and cross-sell products, citing high engagement with analytics and a robust product pipeline.
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Pierce (Needham & Company) also inquired about the impact of increasing used supply and competitive pressures; Trevisan stated that while used inventory is up year over year, it remains below pre-pandemic levels, underscoring the importance of sourcing intelligence tools for dealers.
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Rajat Gupta (JPMorgan) questioned whether dealer anxiety is easing with tariff clarity; Trevisan responded that while there may be some relief, broader macro uncertainty, including high interest rates and elevated prices, continues to affect dealers and consumers.
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Gupta (JPMorgan) followed up on how advances in AI and agentic platforms might affect CarGurus’ business; Trevisan described the company’s CG Discover as a step toward more autonomous, conversational search and highlighted the enduring value of human engagement in car buying.
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Joseph Robert Spak (UBS) sought clarification on CarOffer wind-down costs and ongoing expense absorption; Trevisan explained the breakdown of charges and confirmed that approximately $1 million in quarterly expenses will be absorbed, with most wind-down activities set to conclude in the second half of the year.
Catalysts in Upcoming Quarters
Over the next quarters, the StockStory team will monitor (1) progress on Marketplace product adoption and deeper dealer engagement, (2) further international expansion, particularly in Canada and the U.K., and (3) the company’s ability to execute on its sourcing intelligence and predictive analytics strategy now that CarOffer has been wound down. Shifts in the macroeconomic landscape and competitive responses will also be key indicators for tracking CarGurus’ trajectory.
CarGurus currently trades at $32.28, up from $31.41 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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