In This Article:
Release Date: February 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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CarGurus Inc (NASDAQ:CARG) reported a 14% year-over-year increase in full-year marketplace revenue, with growth accelerating throughout the year.
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The company achieved a 23% year-over-year increase in international revenue, with significant operating profit expansion.
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CarGurus Inc (NASDAQ:CARG) saw strong OEM advertising business growth, returning to double-digit year-over-year expansion after several years of contraction.
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The company's platform has been rated the best ROI by dealers in the industry, capturing a larger share of dealer spend.
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CarGurus Inc (NASDAQ:CARG) reported a 26% year-over-year increase in annual consolidated adjusted EBITDA, with margins expanding over 600 basis points to nearly 28%.
Negative Points
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The digital wholesale segment ended the year with an $18 million adjusted EBITDA loss, reflecting declines in transaction volume.
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Wholesale revenue was down 55% year over year, driven by a decline in dealer-to-dealer transaction volume.
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Product revenue decreased by 55% year over year, reflecting a reversion to normal conditions across origination channels.
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The company anticipates digital wholesale segment EBITDA losses to increase sequentially due to lower transaction volume.
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CarGurus Inc (NASDAQ:CARG) faces tougher comps in 2025, with growth expected to taper down modestly as the year progresses.
Q & A Highlights
Q: Can you provide more details on the new financing functionality being piloted for dealers in the Digital Deal product and any early observations on lead conversion? Also, how might tariffs impact your business? A: (Sam Sale, President and COO) The new functionality, currently in pilot, allows direct integration into dealer financing systems, enabling a seamless credit application process. This aims to enhance the consumer experience and improve lead conversion by bringing ready-to-buy purchasers to dealers. (Jason Trevison, CEO) Regarding tariffs, while there is uncertainty, we anticipate shifts in demand from new to used cars, which could affect dealer turn times and our subscription business. We remain focused on providing ROI-focused solutions to dealers in all market conditions.
Q: What drove the strong net dealer additions in the US and internationally, and how do you see marketplace revenue growth in 2025 given tougher comps? A: (Sam Sale, President and COO) Our reputation as a high ROI provider and our innovative dealer data insights have driven strong dealer engagement and retention. We expect marketplace revenue growth to continue, with a projected 12-14% increase in Q1 2025. Growth may taper slightly later in the year due to tougher comps, but we remain optimistic about sustained momentum.