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1. Company Snapshot

1.a. Company Description

CarGurus, Inc.operates an online automotive marketplace connecting buyers and sellers of new and used cars in the United States and internationally.The company provides consumers an online automotive marketplace where they can search for new and used car listings from its dealers, as well as sell their car in the United States marketplace.


Its marketplace connects dealers to a large audience of informed and engaged consumers.The company operates online marketplaces under the CarGurus brand in Canada and the United Kingdom; and the Autolist and PistonHeads online marketplaces as independent brands in the United States and the United Kingdom.CarGurus, Inc.


was founded in 2005 and is headquartered in Cambridge, Massachusetts.

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1.b. Last Insights on CARG

CarGurus' recent performance was driven by strong Q3 earnings, with quarterly earnings of $0.57 per share beating estimates. The company's marketplace revenue grew 14% YoY to $232 million, with Non-GAAP Marketplace Adjusted EBITDA up 18% YoY. CarGurus also advanced its AI-powered solutions and repurchased $111 million worth of shares. Its dominant position in the US used car marketplace and expanding software offerings are key strengths. According to a recent analysis, CarGurus is a solid buy due to its high-margin marketplace business and robust adjusted EBITDA growth.

1.c. Company Highlights

2. CarGurus' Q3 2025 Earnings: Strong Revenue Growth and Expanding Profitability

CarGurus reported a strong third quarter with consolidated revenue of $239 million, up 3% year-over-year, and Marketplace revenue of $232 million, up 14% year-over-year. Non-GAAP gross profit was $214 million, up 11% year-over-year, with a non-GAAP gross margin of 90%. Adjusted EBITDA was approximately $79 million, up 21% year-over-year, with an adjusted EBITDA margin of 33%. Earnings per share (EPS) came in at $0.57, beating estimates of $0.55.

Publication Date: Nov -08

📋 Highlights
  • Marketplace Revenue Growth: Marketplace revenue reached $232 million, up 14% YoY, exceeding guidance midpoints and driven by CarSID dealer upgrades and higher lead quality.
  • International Expansion Momentum: International revenue surged 27% YoY, with CarSID growth of 15% and 807 net new dealers added globally, led by Canada and the U.K.
  • Profitability Expansion: Adjusted EBITDA hit $79 million, up 21% YoY, with margins rising 490 bps to 33%, reflecting disciplined cost management and pricing power.
  • AI-Driven Operational Efficiency: 80% of managed leads in October were handled by AI, reducing outsourced teams by 40%, while engineering productivity rose 25% via AI tools.
  • Product TAM Expansion: Innovations like PriceVantage and Dealership Mode target a $4 billion TAM in dealer software/data, with beta results showing 5x faster vehicle turn times for engaged dealers.

Revenue Growth Drivers

The company's revenue growth was driven by continued expansion in CarSID, led by dealer upgrades to higher tiers, broader adoption of add-on products, like-for-like price increases, and higher lead quantity and quality. International operations also contributed meaningfully, with revenue up 27% year-over-year. As Jason Trevisan noted, "We've continued to expand our platform with software and data products that help dealers make more intelligent decisions across 4 key workflows: inventory, marketing, conversion, and data."

Product Innovations and Expansion

CarGurus has launched several new products, including PriceVantage, a machine learning-based pricing tool, and Dealership Mode, which provides real-time support to shoppers at the dealership. The company has also expanded its CG Discover product, a Gen AI-powered shopping assistant. These innovations are expected to drive long-term growth and expand the company's addressable market.

Valuation and Growth Prospects

With a P/E Ratio of 21.53 and an EV/EBITDA ratio of 16.18, the market appears to be pricing in a certain level of growth for CarGurus. Analysts estimate revenue growth at 5.7% for next year, which may be conservative given the company's strong track record and expanding product offerings. The company's ROIC of 25.08% and ROE of 34.65% also suggest a strong ability to generate returns on invested capital.

Outlook and Conclusion

CarGurus has reaffirmed its guidance of double-digit revenue growth for Marketplace in Q4, implying a full-year growth rate of double digits as well. The company's focus on innovation, expansion, and AI-centric solutions is expected to drive long-term sustainable growth and increase its market share in the automotive industry.

3. NewsRoom

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CarGurus Study Reveals How AI and Omnichannel Shopping are Shaping the Car Buying and Selling Experience

Dec -03

Source: globenewswire.com

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CarGurus, Inc. $CARG Holdings Raised by Creative Planning

Nov -27

Source: defenseworld.net

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CarGurus: A Solid Buy As Product Scope Expands

Nov -11

Source: seekingalpha.com

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CarGurus, Inc. (CARG) Q3 2025 Earnings Call Transcript

Nov -07

Source: seekingalpha.com

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CarGurus Pursues $4 Billion Dealer Software Market With AI-Powered Products

Nov -07

Source: pymnts.com

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Here's What Key Metrics Tell Us About CarGurus (CARG) Q3 Earnings

Nov -07

Source: zacks.com

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CarGurus (CARG) Q3 Earnings and Revenues Top Estimates

Nov -07

Source: zacks.com

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CarGurus Announces Third Quarter 2025 Results

Nov -06

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.42%)

6. Segments

United States Marketplace

Expected Growth: 6%

Strong demand for used cars, increasing online car shopping, and CarGurus' market-leading inventory and pricing data drive growth in the United States marketplace. Additionally, the company's expanding dealer network, improved user experience, and investments in digital marketing contribute to the 6% growth rate.

Digital Wholesale

Expected Growth: 8%

CarGurus' Digital Wholesale segment growth is driven by increasing adoption of online car buying, expansion into new markets, and strategic partnerships. Additionally, the company's proprietary Instant Market Value (IMV) pricing algorithm and robust inventory management system enable dealers to efficiently source and sell vehicles, further fueling growth.

Other

Expected Growth: 5%

CarGurus' 5% growth is driven by increasing online car shopping, rising demand for used cars, and expanding dealer network. Additionally, the company's investments in artificial intelligence, machine learning, and data analytics enhance its platform, attracting more consumers and dealers. Further, CarGurus' expansion into new markets and services, such as financing and insurance, contribute to its growth.

7. Detailed Products

Listings

CarGurus provides a platform for dealerships and private sellers to list their vehicles for sale, allowing buyers to browse and compare prices.

Dealer Dashboard

A platform for dealerships to manage their inventory, respond to leads, and track performance metrics.

Market Value Analysis

A tool that provides instant market value analysis for vehicles, helping buyers and sellers determine fair prices.

Dealer Reviews

A platform for buyers to review and rate their experiences with dealerships, promoting transparency and accountability.

Advertising

Targeted advertising solutions for dealerships and OEMs to reach in-market car shoppers.

Inventory Management

A tool that helps dealerships manage their inventory, including pricing, merchandising, and distribution.

8. CarGurus, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

CarGurus has a low threat of substitutes due to its unique features and user-friendly interface, making it difficult for customers to find alternative options.

Bargaining Power Of Customers

CarGurus has a medium bargaining power of customers due to the presence of multiple dealerships and private sellers, giving customers some negotiating power.

Bargaining Power Of Suppliers

CarGurus has a low bargaining power of suppliers due to its strong market position and ability to negotiate with dealerships and private sellers.

Threat Of New Entrants

CarGurus has a high threat of new entrants due to the low barriers to entry in the online marketplace, making it easy for new competitors to emerge.

Intensity Of Rivalry

CarGurus operates in a highly competitive market with many established players, leading to a high intensity of rivalry among competitors.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 23.96%
Debt Cost 3.95%
Equity Weight 76.04%
Equity Cost 11.79%
WACC 9.91%
Leverage 31.51%

11. Quality Control: CarGurus, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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A-Score: 5.2/10

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

35.86$

Current Price

35.86$

Potential

-0.00%

Expected Cash-Flows