CarGurus (CARG) grows Q1 2026 revenue 15% but books lease impairment
Rhea-AI Filing Summary
CarGurus, Inc. reported first‑quarter 2026 revenue of $243.6 million, up 15% from $212.2 million a year earlier, driven mainly by higher dealer subscription revenue and pricing. Net income from continuing operations was $32.2 million, down from $42.1 million, as the company recorded $19.7 million of non‑cash impairment charges tied to its 121 First Street lease and related assets.
Adjusted EBITDA from continuing operations rose to $80.2 million from $68.7 million, reflecting strong underlying profitability despite the impairment. Operating cash flow was $69.8 million, while cash and equivalents declined to $72.0 million as CarGurus repurchased and retired 5.34 million Class A shares for about $175 million under its 2026 share repurchase program. The wind‑down of CarOffer is fully reflected as discontinued operations, with no discontinued‑operations impact in the quarter.
Positive
- None.
Negative
- None.
Insights
Solid topline growth and cash generation offset by lease impairment and heavy buybacks.
CarGurus grew Q1 2026 revenue to $243.6M, up 15% year over year, mainly from higher dealer subscription revenue and pricing power. Adjusted EBITDA from continuing operations increased to $80.2M, indicating strong underlying margins despite higher operating costs.
GAAP net income from continuing operations fell to $32.2M from $42.1M, largely because of a $19.7M non‑cash impairment of a 121 First Street lease right‑of‑use asset and related improvements. This charge reflects revised sublease expectations rather than a cash outflow in the quarter.
Operating cash flow was a robust $69.8M, while cash and equivalents declined to $72.0M after repurchasing $175.0M of Class A shares under the 2026 share repurchase program. The completed wind‑down of CarOffer means results now reflect a single consolidated segment, simplifying future comparisons starting with the quarter ended March 31, 2026.
Key Figures
Key Terms
Adjusted EBITDA from continuing operations financial
discontinued operations financial
right-of-use asset financial
ASC 606 financial
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _________________ to _________________
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices Zip Code)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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• whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. |
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• whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). |
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• whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. |
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Accelerated filer |
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Non-accelerated filer |
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Small reporting company |
Emerging growth company |
• If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. |
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• whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). |
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As of April 30, 2026, the registrant had
Table of Contents
Table of Contents
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PART I. |
FINANCIAL INFORMATION |
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Item 1. |
Financial Statements |
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Unaudited Condensed Consolidated Balance Sheets |
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Unaudited Condensed Consolidated Income Statements |
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Unaudited Condensed Consolidated Statements of Comprehensive Income |
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Unaudited Condensed Consolidated Statements of Stockholders’ Equity |
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Unaudited Condensed Consolidated Statements of Cash Flows |
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Notes to Unaudited Condensed Consolidated Financial Statements |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
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Item 4. |
Controls and Procedures |
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PART II. |
OTHER INFORMATION |
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Item 1. |
Legal Proceedings |
39 |
Item 1A. |
Risk Factors |
39 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
40 |
Item 5. |
Other Information |
41 |
Item 6. |
Exhibits |
42 |
Signatures |
43 |
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Table of Contents
SPECIAL NOTE REGARDING FORWARD‑LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward‑looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Forward‑looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward‑looking statements because they contain words such as “aim,” “anticipates,” “believes,” “could,” “estimates,” “expects,” “goal,” “intends,” “may,” “might,” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “target,” “will,” “would,” or similar expressions and the negatives of those terms. Forward-looking statements contained in this Quarterly Report include statements about:
1
Table of Contents
You should not rely upon forward‑looking statements as predictions of future events. We have based the forward‑looking statements contained in this Quarterly Report primarily on our current expectations and projections about future events and trends that we reasonably believe may affect our business, financial condition, operating results, and growth prospects. The outcome of the events described in these forward‑looking statements is subject to risks, uncertainties, and other factors that are described in this Quarterly Report. We have included important risk factors in the cautionary statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the U.S. Securities and Exchange Commission, or SEC, on February 19, 2026, or Annual Report, particularly those discussed in Part I, Item 1A, “Risk Factors,” in our Annual Report, that could cause actual results or events to differ materially from the forward-looking statements that we make. Should one or more of these risks or other uncertainties materialize, or if underlying assumptions prove incorrect, actual outcomes may vary materially from those described or implied in the forward-looking statements. We operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward‑looking statements contained in this Quarterly Report. Further, our forward‑looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, or joint ventures in which we may be involved, or investments we may make.
The forward‑looking statements made in this Quarterly Report speak only as of the date of this Quarterly Report. We undertake no obligation to update any forward‑looking statement made in this Quarterly Report to reflect events or circumstances after the date of this Quarterly Report or to reflect new information or the occurrence of unanticipated events, except as required by law.
NOTE REGARDING TRADEMARKS
CarGurus® and Autolist® are each a registered trademark of CarGurus, Inc. and PistonHeads® is a registered trademark of CarGurus Ireland Limited in the U.K. and the European Union. All other product names, trademarks, and registered trademarks are property of their respective owners. We have omitted the ® and ™ designations, as applicable, for the trademarks used in this Quarterly Report.
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PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
CarGurus, Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
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As of |
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As of |
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Assets |
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Current assets |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net of allowance for doubtful accounts of $ |
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Prepaid expenses, prepaid income taxes, and other current assets |
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Deferred contract costs |
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Total current assets |
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Property and equipment, net |
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Intangible assets, net |
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Goodwill |
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Operating lease right-of-use assets |
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Deferred tax assets |
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Deferred contract costs, net of current portion |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders’ equity |
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Current liabilities |
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Accounts payable |
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$ |
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$ |
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Accrued expenses, accrued income taxes, and other current liabilities |
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Deferred revenue |
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Operating lease liabilities |
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Total current liabilities |
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Operating lease liabilities |
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Deferred tax liabilities |
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Other non–current liabilities |
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Total liabilities |
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(Note 9) |
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Stockholders’ equity |
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Preferred stock, $ |
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Class A common stock, $ |
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Class B common stock, $ |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive income |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.
3
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CarGurus, Inc.
Unaudited Condensed Consolidated Income Statements
(in thousands, except share and per share data)
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Three Months Ended |
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2026 |
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2025 |
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Revenue |
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$ |
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$ |
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Cost of revenue(1)(2) |
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Gross profit |
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Operating expenses |
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Sales and marketing |
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Product, technology, and development |
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General and administrative |
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Impairments |
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Depreciation and amortization |
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Total operating expenses |
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Income from continuing operations |
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Other income, net |
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Interest income |
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Other expense, net |
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( |
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( |
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Total other income, net |
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Income from continuing operations before income taxes |
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Provision for income taxes |
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Net income from continuing operations |
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Net loss from discontinued operations, net of tax benefits |
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( |
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Consolidated net income |
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$ |
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$ |
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Net income per share attributable to common stockholders (Note 11) |
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Basic |
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Continuing operations |
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$ |
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$ |
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Consolidated |
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$ |
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$ |
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Diluted |
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Continuing operations |
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$ |
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$ |
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Consolidated |
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$ |
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$ |
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Weighted-average number of shares of common stock used in |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.
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CarGurus, Inc.
Unaudited Condensed Consolidated Statements of Comprehensive Income
(in thousands)
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Three Months Ended |
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2026 |
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2025 |
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Consolidated net income |
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$ |
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$ |
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Other comprehensive income |
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Foreign currency translation adjustment |
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( |
) |
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Consolidated comprehensive income |
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$ |
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$ |
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The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.
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CarGurus, Inc.
Unaudited Condensed Consolidated Statements of Stockholders’ Equity
(in thousands, except share data)
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Class A |
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Class B |
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Additional |
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Retained |
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Accumulated |
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Total |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Earnings |
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Income |
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Equity |
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Balance as of December 31, 2025 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Consolidated net income |
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— |
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— |
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— |
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— |
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— |
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— |
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Stock–based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock upon exercise of stock options |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock upon vesting of restricted stock units |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
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Withholding taxes on net share settlements of restricted stock units |
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( |
) |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
) |
Repurchase of common stock |
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( |
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( |
) |
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— |
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— |
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( |
) |
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( |
) |
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— |
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( |
) |
Foreign currency translation adjustment |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance as of March 31, 2026 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Class A |
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Class B |
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Additional |
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Retained |
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Accumulated |
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Total |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Earnings |
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Loss |
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Equity |
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Balance as of December 31, 2024 |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Consolidated net income |
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— |
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— |
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— |
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— |
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— |
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— |
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Stock–based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock upon exercise of stock options |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock upon vesting of restricted stock units |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Withholding taxes on net share settlements of restricted stock units |
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( |
) |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
Repurchase of common stock |
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( |
) |
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( |
) |
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— |
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— |
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( |
) |
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( |
) |
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— |
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( |
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Conversion of common stock |
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( |
) |
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( |
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— |
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— |
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— |
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— |
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Foreign currency translation adjustment |
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— |
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— |
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— |
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— |
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— |
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— |
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Balance as of March 31, 2025 |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
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The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.
6
Table of Contents
CarGurus, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
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Three Months Ended |
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2026 |
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2025 |
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Operating Activities |
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Consolidated net income |
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$ |
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$ |
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Adjustments to reconcile consolidated net income to net cash provided by operating activities |
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Depreciation and amortization |
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Currency loss (gain) on foreign denominated transactions |
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( |
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Deferred taxes |
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( |
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Provision for doubtful accounts |
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Stock-based compensation expense |
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Amortization of deferred financing costs |
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Amortization of deferred contract costs |
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Impairments |
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Changes in operating assets and liabilities |
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Accounts receivable |
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( |
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Inventory |
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( |
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Prepaid expenses, prepaid income taxes, and other assets |
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Deferred contract costs |
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( |
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( |
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Accounts payable |
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Accrued expenses, accrued income taxes, and other liabilities |
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( |
) |
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( |
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Deferred revenue |
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Lease obligations |
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( |
) |
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Net cash provided by operating activities |
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Investing Activities |
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Purchases of property and equipment |
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( |
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( |
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Capitalization of website development costs |
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( |
) |
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( |
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Net cash used in investing activities |
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( |
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( |
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Financing Activities |
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Proceeds from issuance of common stock upon exercise of stock options |
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||
Payment of withholding taxes on net share settlements of restricted stock units |
|
|
( |
) |
|
|
( |
) |
Repurchases of common stock |
|
|
( |
) |
|
|
( |
) |
Payment of finance lease obligations |
|
|
( |
) |
|
|
( |
) |
Change in gross advance payments received from third-party transaction processor |
|
|
|
|
|
( |
) |
|
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
Impact of foreign currency on cash, cash equivalents, and restricted cash |
|
|
( |
) |
|
|
|
|
Net decrease in cash, cash equivalents, and restricted cash |
|
|
( |
) |
|
|
( |
) |
Cash, cash equivalents, and restricted cash at beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents, and restricted cash at end of period |
|
$ |
|
|
$ |
|
||
Supplemental disclosure of cash flow information |
|
|
|
|
|
|
||
(Refunds) or cash paid for income taxes, net |
|
$ |
( |
) |
|
$ |
|
|
Cash paid for operating lease liabilities |
|
$ |
|
|
$ |
|
||
Cash paid for interest |
|
$ |
|
|
$ |
|
||
Supplemental noncash disclosure of cash flow information |
|
|
|
|
|
|
||
Unpaid purchases of property and equipment and capitalized hosting arrangements |
|
$ |
|
|
$ |
|
||
Capitalized stock-based compensation expense in website development and |
|
$ |
|
|
$ |
|
||
Unpaid repurchases of common stock |
|
$ |
|
|
$ |
|
||
Unpaid excise tax on repurchases of common stock |
|
$ |
|
|
$ |
|
||
Obtaining a right-of-use asset in exchange for an operating lease liability |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.
7
Table of Contents
CarGurus, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
1. Organization and Business Description
CarGurus, Inc. (the “Company” or “CarGurus”) is a multinational automotive platform helping consumers and dealers confidently buy and sell vehicles. Founded in 2006 with a mission to bring more trust and transparency to car shopping, CarGurus is an automotive shopping site in the U.S. CarGurus’ selection, trusted automotive insights, and data-driven products and solutions support each shopper’s journey – from online research and shopping to in-dealership decisions – to empower them at every step. CarGurus provides dealers a personalized, predictive intelligence platform with software solutions that helps them run their businesses more efficiently and profitably at all stages of inventory acquisition and pricing, marketing, and conversion to sale.
The wind-down of CarOffer, LLC (“CarOffer”) was completed and the business was considered abandoned for accounting purposes as of December 31, 2025. For further information, refer to Note 3 of the Unaudited Condensed Consolidated Financial Statements (as defined below).
The Company operates principally in the U.S., where it also operates the Autolist online marketplace as an independent brand. The Company also operates online marketplaces under the CarGurus brand in Canada and the U.K. In the U.K. it also operates the PistonHeads online marketplace as an independent brand.
The Company has subsidiaries in the U.S., Canada, Ireland, and the U.K. Effective as of the fourth quarter of 2025 the Company revised its segment reporting from
The Company is subject to a number of risks and uncertainties common to companies in its and similar industries and stages of development including but not limited to rapid technological changes, competition from substitute products and services from larger companies, management of international activities, protection of proprietary rights, litigation, and dependence on key individuals.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying interim condensed consolidated financial statements are unaudited (the “Unaudited Condensed Consolidated Financial Statements”). The Unaudited Condensed Consolidated Financial Statements and related disclosures have been prepared in conformity with accounting principles generally accepted in the U.S. (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).
The Unaudited Condensed Consolidated Financial Statements have also been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The Unaudited Condensed Consolidated Financial Statements reflect all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of the Company’s financial statements for interim periods. These interim period results are not necessarily indicative of the results to be expected for any other interim period or the full year.
8
Table of Contents
The Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on February 19, 2026 (the “Annual Report”).
The Company has presented the financial results of CarOffer as discontinued operations in the Unaudited Condensed Consolidated Financial Statements.
Unless indicated otherwise, the information in these notes to the Unaudited Condensed Consolidated Financial Statements relates to the Company’s continuing operations and does not include the results of discontinued operations.
For further information on discontinued operations, refer to Note 3 of the Unaudited Condensed Consolidated Financial Statements.
Principles of Consolidation
The Unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Subsequent Event Considerations
The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the Unaudited Condensed Consolidated Financial Statements to provide additional evidence for certain estimates or to identify matters that require additional disclosure. The Company has evaluated all subsequent events and determined that there are no material recognized or unrecognized subsequent events requiring disclosure.
Use of Estimates
The preparation of the Unaudited Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period.
Although the Company regularly assesses these estimates, actual results could differ materially from these estimates. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results may differ from management’s estimates if these results differ from historical experience, or other assumptions do not turn out to be substantially accurate, even if such assumptions are reasonable when made. Changes in estimates are recognized in the period in which they become known.
Critical estimates relied upon in preparing the Unaudited Condensed Consolidated Financial Statements include the determination of variable consideration in the Company’s revenue recognition and the capitalization and useful lives of product, technology, and development costs for website development, internal-use software, and hosting arrangements. Accordingly, the Company considers these to be its critical accounting estimates, and believes that of the Company’s significant accounting policies, these involve the greatest degree of judgment and complexity.
9
Table of Contents
Concentration of Credit Risk
The Company maintains its cash and cash equivalents, principally with accredited financial institutions of high credit standing. Although the Company deposits its cash and cash equivalents with multiple financial institutions, its deposits with each such financial institution exceed governmental insured limits.
The Company routinely assesses the creditworthiness of its customers and does not require collateral. The Company generally has not experienced any material losses related to receivables from individual customers or groups of customers.
The Company had no material losses related to receivables as the losses were dispersed across a large number of customers. Due to this factor, no additional credit risk beyond amounts provided for collection losses was believed by management to be probable in the Company’s accounts receivable and other receivables.
As of March 31, 2026 and December 31, 2025, for several dealer accounts represented
For the three months ended March 31, 2026 and 2025,
As of March 31, 2026 and December 31, 2025, $
Significant Accounting Policies
The Unaudited Condensed Consolidated Financial Statements reflect the application of certain significant accounting policies as described below and elsewhere in these notes to the Unaudited Condensed Consolidated Financial Statements. As of March 31, 2026, there have been no material changes in the Company’s significant accounting policies, which are detailed in the Annual Report.
Recent Accounting Pronouncements Not Yet Adopted
From time to time, new accounting pronouncements are issued by the FASB or other standard-setting bodies and adopted by the Company on or prior to the specified effective date. Unless otherwise disclosed below, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. As of March 31, 2026, there are no new accounting pronouncements that the Company is considering adopting, other than those described below.
10
Table of Contents
In September 2025 the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), which clarifies and modernizes the guidance to reflect the evolution of software development from a sequential to an agile development method. ASU 2025-06 removes all references to project development stages to reflect this change in software development and requires capitalization of software costs to begin when management has authorized and committed to funding the project and it is probable the project will be completed and used to perform the intended function. ASU 2025-06 does not change what internal-use software costs can be capitalized or when such capitalization ceases. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. ASU 2025-06 may be adopted either prospectively, using a modified transition approach, or retrospectively. The Company is currently evaluating the impact of ASU 2025-06 on its future consolidated financial statements and related disclosures.
In November 2024 the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 is intended to provide more detailed expense information and requires additional disaggregated disclosures in the notes to the financial statements for categories of expenses that are included on the face of the income statement. ASU 2024-03 is effective for the fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. ASU 2024-03 may be applied either prospectively to financial statements issued for periods after the effective date of ASU 2024-03 or retrospectively to all prior periods presented in the consolidated financial statements. The Company is currently evaluating the impact of ASU 2024-03 on its future consolidated financial statements and related disclosures.
3. Discontinued Operations
On August 6, 2025, the Company’s Board of Directors (the “Board”) determined, after considering all reasonably available options and a broader strategic reassessment, that it was in the best interests of the Company’s stockholders to wind down CarOffer. The wind-down of CarOffer was completed and the business was considered abandoned for accounting purposes as of December 31, 2025. The assets, liabilities, and results of operations of CarOffer, excluding certain assets that have been repurposed for corporate use, have been presented as discontinued operations in accordance with ASC 205-20, Discontinued Operations, as the disposition represents a strategic shift that has a major effect on the Company’s operations and financial results. CarOffer’s operations were previously reported within the Digital Wholesale segment.
11
Table of Contents
For the three months ended March 31, 2025, major classes of discontinued operations included in the Unaudited Condensed Consolidated Income Statements were as follows:
|
|
Three Months Ended |
|
|
|
|
2025 |
|
|
|
|
(dollars in thousands) |
|
|
Revenue |
|
$ |
|
|
Cost of revenue |
|
|
|
|
Gross profit |
|
|
|
|
Operating expenses |
|
|
|
|
Sales and marketing |
|
|
|
|
Product, technology, and development |
|
|
|
|
General and administrative |
|
|
|
|
Depreciation and amortization |
|
|
|
|
Total operating expenses |
|
|
|
|
Loss from discontinued operations before income taxes |
|
|
( |
) |
Benefit from income taxes |
|
|
( |
) |
Net loss from discontinued operations, net of tax benefits |
|
$ |
( |
) |
|
|
|
|
|
Net loss from discontinued operations per share (Note 11) |
|
|
|
|
Basic |
|
$ |
( |
) |
Diluted(1) |
|
$ |
( |
) |
Weighted-average number of shares of common stock used in computing net loss per share attributable to common stockholders |
|
|
|
|
Basic |
|
|
|
|
Diluted |
|
|
|
|
The Company has elected to present its Unaudited Condensed Consolidated Statement of Cash Flows on a consolidated basis, inclusive of discontinued operations activity in the table below. For the three months ended March 31, 2025, the following table presents significant non-cash items and capital expenditures of the discontinued operations for the period presented:
|
|
Three Months Ended March 31, |
|
|
|
|
2025 |
|
|
|
|
(dollars in thousands) |
|
|
Depreciation and amortization |
|
$ |
|
|
Capitalized expenditures |
|
$ |
( |
) |
Stock–based compensation expense |
|
$ |
|
|
As a result of the wind-down, the Company incurred total expenditures of $
12
Table of Contents
4. Revenue Recognition
The Company provides disaggregation of revenue by geographic region. Revenue by geographic region is disaggregated by (i) U.S. and (ii) International regions as disclosed in Note 13 of the Unaudited Condensed Consolidated Financial Statements. The Company believes these categories best depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.
ASC 606 requires that the Company disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied as of the relevant quarter end.
For contracts with an original expected duration greater than one year, the aggregate amount of the transaction price allocated to the performance obligations that were unsatisfied as of March 31, 2026, was approximately $
For contracts with an original expected duration of one year or less, the Company has applied the practical expedient available under ASC 606 to not disclose the amount of transaction price allocated to unsatisfied performance obligations as of March 31, 2026. For performance obligations not satisfied as of March 31, 2026, and to which this expedient applies, the nature of the performance obligations, the variable consideration, and any consideration from contracts with customers not included in the transaction price is consistent with performance obligations satisfied as of March 31, 2026.
For the three months ended March 31, 2026 and 2025, revenue recognized from amounts included in deferred revenue at the beginning of the period was $
5. Fair Value of Financial Instruments
As of March 31, 2026 and December 31, 2025, assets measured at fair value on a recurring basis consisted of the following:
|
|
As of March 31, 2026 |
|
|||||||||||||
|
|
Quoted Prices |
|
|
Significant Other |
|
|
Significant |
|
|
Total |
|
||||
|
|
(dollars in thousands) |
|
|||||||||||||
Cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|||
Total |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
|
|
As of December 31, 2025 |
|
|||||||||||||
|
|
Quoted Prices |
|
|
Significant Other |
|
|
Significant |
|
|
Total |
|
||||
|
|
(dollars in thousands) |
|
|||||||||||||
Cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|||
Total |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
13
Table of Contents
6. Property and Equipment, Net
As of March 31, 2026 and December 31, 2025, property and equipment, net consisted of the following:
|
|
As of |
|
|
As of |
|
||
|
|
(dollars in thousands) |
|
|||||
Capitalized equipment |
|
$ |
|
|
$ |
|
||
Capitalized internal-use software |
|
|
|
|
|
|
||
Capitalized website development |
|
|
|
|
|
|
||
Furniture and fixtures |
|
|
|
|
|
|
||
Leasehold improvements |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Less accumulated depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
Total |
|
$ |
|
|
$ |
|
||
For the three months ended March 31, 2026 and 2025, depreciation and amortization expense, excluding amortization of intangible assets, amortization of capitalized hosting arrangements, disposals, write offs, and impairments, was $
During the three months ended March 31, 2026, the Company impaired $
During the three months ended March 31, 2026, as a result of the impairment for the 121 First Street lease, the Company impaired $
7. Accrued Expenses, Accrued Income Taxes, and Other Current Liabilities
As of March 31, 2026 and December 31, 2025, accrued expenses, accrued income taxes, and other current liabilities consisted of the following:
|
|
As of |
|
|
As of |
|
||
|
|
(dollars in thousands) |
|
|||||
Accrued bonus |
|
$ |
|
|
$ |
|
||
Accrued commissions |
|
|
|
|
|
|
||
Other accrued expenses, accrued income taxes, and other current liabilities |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
14
Table of Contents
8. Debt
As of March 31, 2026 and December 31, 2025, the Company had
Revolving Credit Facility
On September 26, 2022, the Company entered into a Credit Agreement with PNC Bank, National Association, as administrative agent and collateral agent and an L/C Issuer (as defined in the Credit Agreement), and the other lenders, L/C Issuers, and parties thereto from time to time (the “Credit Agreement”). The Credit Agreement consists of a revolving credit facility (the “2022 Revolver”), which allows the Company to borrow up to $
The applicable interest rate is, at the Company’s option, based on a number of different benchmark rates and applicable spreads, based on the ratio of the outstanding principal amount of the Company’s secured indebtedness to the trailing four quarters of consolidated EBITDA (as determined under the Credit Agreement, the “Consolidated Secured Net Leverage Ratio”). The Credit Agreement also requires the Company to pay a commitment fee to the lenders with respect of the unutilized revolving commitments at a rate ranging from
The 2022 Revolver is secured by a first priority lien on substantially all tangible and intangible property of the Company, as well as any future guarantors, and pledges of the equity of certain wholly-owned subsidiaries, in each case subject to certain exceptions, limitations, and exclusions from the collateral. The Credit Agreement includes customary events of default and requires the Company to comply with customary affirmative and negative covenants, including a financial covenant requiring that the Company not exceed certain Consolidated Secured Net Leverage Ratio ranges at the end of each fiscal quarter. The Company was in compliance with all covenants as of March 31, 2026.
As of March 31, 2026 and December 31, 2025, there were
As of March 31, 2026 and December 31, 2025, deferred financing costs were $
For the three months ended March 31, 2026 and 2025, amortization expense associated with deferred financing costs was immaterial.
For the three months ended March 31, 2026 and 2025, commitment fees under the 2022 Revolver were immaterial.
9. Commitments and Contingencies
Contractual Obligations and Commitments
As of March 31, 2026, all of the Company’s property and equipment and capitalized hosting arrangements have been purchased with cash with the exception of unpaid amounts as disclosed in the Unaudited Condensed Consolidated Statements of Cash Flows.
15
Table of Contents
Leases
As of March 31, 2026, there were no material changes in the Company’s leases from those disclosed in the Annual Report, other than those disclosed below.
121 First Street Lease Impairment
During the three months ended March 31, 2026, the Company identified a triggering event requiring an impairment test for the 121 First Street lease, which it intends to sublease, primarily due to lower anticipated rental recovery rates. The Company assessed the asset group for recoverability, and determined the asset group was not recoverable. Therefore, the Company estimated the fair value of the asset group to compare to the carrying value for impairment.
The Company estimated fair value using the discounted cash flow method, with key inputs including the selected market rental rates based upon similar office spaces, the discount rate, and other estimated costs. The fair value measurement was categorized as Level 3 within the fair value hierarchy as there were significant unobservable inputs utilized in the valuation technique. As a result, the Company recognized an impairment of the 121 First Street lease to reduce the carrying value to fair value.
During the three months ended March 31, 2026, the Company recognized non-cash impairment charges of $
Letters of Credit
As of March 31, 2026 and December 31, 2025, $
Tax Contingencies
The Company is subject to taxation in the U.S. and certain other jurisdictions in which it operates, which could include corporate income tax, sales and use tax, value added tax, excise tax, gross receipts tax, and property tax. State, local, and foreign jurisdictions have differing rules and regulations governing corporate income, sales, use, value added, and other taxes. These rules and regulations are complex and subject to varying interpretations that may change over time due to new court interpretations and newly enacted rules and regulations. As a result, the Company could face the possibility of tax assessments and audits, and its liability for these taxes and associated penalties could exceed its original estimates, which could be material.
Legal Matters
From time to time, the Company may become involved in legal proceedings or be subject to claims arising in the ordinary course of its business. The Company recognizes a liability when it believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. Judgment is required to determine both the probability of having incurred a liability and the estimated amount of the liability. The Company is not presently subject to any pending or threatened litigation that it believes, if determined adversely to the Company, individually or taken together, would reasonably be expected to have a material adverse effect on its business or financial results. However, litigation is inherently unpredictable and the future outcome of legal proceedings and other contingencies may be unexpected or differ from the Company’s estimated liabilities, which could have a material adverse effect on the Company’s future financial results.
16
Table of Contents
10. Stock-based Compensation and Common Stock Share Repurchases
Stock-based Compensation Expense
For the three months ended March 31, 2026 and 2025, stock-based compensation expense, consisting primarily of restricted stock units, was recognized in the Unaudited Condensed Consolidated Income Statements was as follows:
|
|
Three Months Ended |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(dollars in thousands) |
|
|||||
Cost of revenue |
|
$ |
|
|
$ |
|
||
Sales and marketing expense |
|
|
|
|
|
|
||
Product, technology, and development expense |
|
|
|
|
|
|
||
General and administrative expense |
|
|
|
|
|
|
||
Total stock-based compensation expense from continuing operations |
|
|
|
|
|
|
||
Total stock-based compensation expense from discontinued operations |
|
|
— |
|
|
|
|
|
Total |
|
$ |
|
|
$ |
|
||
For the three months ended March 31, 2026 and 2025, consolidated stock-based compensation expense excluded $
Common Stock Share Repurchase Programs
In February 2026 the Company announced that the Board authorized a program pursuant to which it may purchase up to $
In November 2024 the Company announced that the Board authorized a program pursuant to which it may purchase up to $
During the three months ended March 31, 2026, the Company repurchased and retired
During the three months ended March 31, 2025, the Company repurchased and retired
17
Table of Contents
11. Earnings Per Share
The Company has two classes of common stock authorized: Class A common stock and Class B common stock. The rights of the holders of Class A and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to
During the three months ended March 31, 2026,
Consolidated basic net income per share (“Basic EPS”) is computed by dividing consolidated net income by the weighted-average number of common shares outstanding during the reporting period. The Company computes the weighted-average number of common shares outstanding during the reporting period using the total number of shares of Class A common stock and Class B common stock outstanding as of the last day of the previous year plus the weighted-average of any additional shares issued and outstanding during the reporting period, less the weighted-average of any shares repurchased during the period.
Consolidated diluted net income per share (“Diluted EPS”) gives effect to all potentially dilutive securities. Diluted EPS is computed by dividing consolidated net income by the weighted-average number of common shares outstanding during the reporting period using (i) the number of shares of common stock used in the Basic EPS calculation as indicated above, and (ii) if dilutive, the incremental weighted-average common stock that the Company would issue upon the exercise of stock options and the vesting of RSUs. The dilutive effect of these common stock equivalents is reflected in diluted earnings per share by application of the treasury stock method.
Continuing basic and diluted net income per share and discontinued basic and diluted net income per share are calculated using the same methodology as described above, as applicable. Diluted earnings per share from discontinued operations is calculated using net income from continuing operations to determine the denominator, in accordance with applicable guidance.
18
Table of Contents
For the three months ended March 31, 2026 and 2025, a reconciliation of the numerator and denominator used in the calculation of continuing, discontinued, and consolidated basic and diluted net income (loss) per share was as follows:
|
|
Three Months Ended |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(dollars in thousands) |
|
|||||
Numerator |
|
|
|
|
|
|
||
Net income from continuing operations |
|
$ |
|
|
$ |
|
||
Net loss from discontinued operations |
|
$ |
|
|
$ |
( |
) |
|
Consolidated net income |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Denominator |
|
|
|
|
|
|
||
Weighted-average number of shares of common stock used |
|
|
|
|
|
|
||
Dilutive effect of share equivalents resulting from stock |
|
|
|
|
|
|
||
Dilutive effect of share equivalents resulting from |
|
|
|
|
|
|
||
Weighted-average number of shares of common stock |
|
|
|
|
|
|
||
Net income (loss) per share attributable to common stockholders |
|
|
|
|
|
|
||
Basic |
|
|
|
|
|
|
||
Continuing operations |
|
$ |
|
|
$ |
|
||
Discontinued operations |
|
$ |
|
|
$ |
( |
) |
|
Consolidated |
|
$ |
|
|
$ |
|
||
Diluted |
|
|
|
|
|
|
||
Continuing operations |
|
$ |
|
|
$ |
|
||
Discontinued operations |
|
$ |
|
|
$ |
( |
) |
|
Consolidated |
|
$ |
|
|
$ |
|
||
For the three months ended March 31, 2026 and 2025, potentially dilutive common stock equivalents that have been excluded from the calculation of diluted weighted-average shares outstanding as their effect would have been anti-dilutive was as follows:
|
|
Three Months Ended |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Stock options outstanding |
|
|
|
|
|
|
||
Restricted stock units outstanding |
|
|
|
|
|
|
||
12. Income Taxes
During the three months ended March 31, 2026 and 2025, the Company recognized an income tax provision of $
The effective tax rates for the three months ended March 31, 2026 and 2025, were greater than the statutory tax rate of
19
Table of Contents
13. Segment and Geographic Information
Beginning in the fourth quarter of 2025, in connection with the wind-down of CarOffer, the Company’s , who acts as the CODM, began to manage the business, make operating decisions, and evaluate operating performance based on consolidated results. Accordingly, the change led to revisions to the nature and substance of information regularly provided to and used by the CODM, and served to align the Company’s reported results with its ongoing growth strategy. As a result, beginning in the fourth quarter of 2025 the Company reports its financial results as a reportable segment. Accordingly, the Company has recast prior year segment disclosures for comparability.
The Company’s significant segment expenses consist of cost of revenue and sales and marketing expense. Significant segment expenses are presented in the Unaudited Condensed Consolidated Income Statements. The Company’s other segment items consist of product, technology, and development expense, general and administrative expense, impairment expense, and depreciation and amortization expense, which have been disclosed separately on the Unaudited Condensed Consolidated Income Statements to meet disclosure requirements.
Segment assets are reported on the Unaudited Condensed Consolidated Balance Sheets as total assets.
For the three months ended March 31, 2026 and 2025, revenue by geographical region was as follows:
|
|
Three Months Ended |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(dollars in thousands) |
|
|||||
Revenue by Geographic Region |
|
|
|
|
|
|
||
U.S. |
|
$ |
|
|
$ |
|
||
International |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
20
Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited interim condensed consolidated financial statements, or the Unaudited Condensed Consolidated Financial Statements, and the related notes thereto, included elsewhere in this Quarterly Report, and our consolidated financial statements and the related notes and other financial information included in our Annual Report. Some of the information contained in this discussion and analysis or elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business and our performance and future success, includes forward-looking statements that involve risks and uncertainties. See “Special Note Regarding Forward-Looking Statements.” For a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis you should review our Annual Report, including those cautionary statements set forth under Part I, Item 1A “Risk Factors.” We qualify all of our forward-looking statements by such cautionary statements.
In this discussion, we use financial measures that are considered non-GAAP financial measures under SEC rules. These rules regarding non-GAAP financial measures require supplemental explanation and reconciliation, which are included elsewhere in this Quarterly Report. Investors should not consider non-GAAP financial measures in isolation from or in substitution for, financial information presented in compliance with U.S. generally accepted accounting principles, or GAAP.
The wind-down of CarOffer, LLC, or CarOffer, was completed and the business was considered abandoned for accounting purposes as of December 31, 2025. For further information on the wind-down of CarOffer and related impact on financial results, refer to Discontinued Operations below.
This section of this Quarterly Report discusses 2026 and 2025 items and period-to-period comparisons between 2026 and 2025. The period‑to‑period comparison of financial results is not necessarily indicative of future results.
Company Overview
CarGurus is a multinational automotive platform helping consumers and dealers confidently buy and sell vehicles. Founded in 2006 with a mission to bring more trust and transparency to car shopping, CarGurus is the No. 1 visited automotive shopping site in the U.S.1 with the largest selection of inventory and network of dealers2. CarGurus’ selection, trusted automotive insights, and data-driven products and solutions support each shopper’s journey – from online research and shopping to in-dealership decisions – to empower them at every step. CarGurus provides dealers a personalized, predictive intelligence platform with software solutions that helps them run their businesses more efficiently and profitably at all stages of inventory acquisition and pricing, marketing, and conversion to sale.
We have subsidiaries in the U.S., Canada, Ireland, and the U.K. and we operate the following marketplaces:
U.S., U.K., and Canada |
U.S. |
U.K. |
|
|
|
1 Similarweb: Traffic Insights (Cars.com, Autotrader.com, TrueCar.com, CARFAX.com Listings (defined as CARFAX.com Total Visits minus Vehicle History Reports)), Q1 2026, U.S.
2 Compared to Autotrader.com, Cars.com, TrueCar.com, and CARFAX.com (Joreca as of March 31, 2026)
21
Table of Contents
Discontinued Operations
On August 6, 2025, our Board of Directors determined, after considering all reasonably available options and a broader strategic reassessment, that it was in the best interests of our stockholders to wind down CarOffer.
The wind-down of CarOffer was completed and the business was considered abandoned for accounting purposes as of December 31, 2025. We have presented the financial results of CarOffer as discontinued operations in the Unaudited Condensed Consolidated Financial Statements. No assets or liabilities were classified as discontinued operations as of March 31, 2026 or December 31, 2025. No results of operations were classified as discontinued operations for the three months ended March 31, 2026. The Unaudited Condensed Consolidated Income Statement for the three months ended March 31, 2025, was derived from the Unaudited Condensed Consolidated Income Statement of CarGurus, Inc. as of that date, adjusted for the reclassification of discontinued operations. The Unaudited Condensed Consolidated Statement of Comprehensive Income, Unaudited Condensed Consolidated Statement of Stockholders’ Equity, and the Unaudited Condensed Consolidated Statement of Cash Flows as of March 31, 2025, related to discontinued operations have not been separately reclassified and are included within each for the period referenced.
As a result of the wind-down, we incurred total expenditures of $13.3 million, of which all cash expenditures were incurred during the second half of 2025 and were all paid as of December 31, 2025.
For further information, refer to Note 3 of the Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.
Reportable Segments, Revenue, and Financial Overview
Beginning in the fourth quarter of 2025, in connection with the wind-down of CarOffer, our chief executive officer, who acts as the Chief Operating Decision Maker, or CODM, began to manage our business, make operating decisions, and evaluate operating performance based on consolidated results. Accordingly, the change led to revisions to the nature and substance of information regularly provided to and used by the CODM, and served to align our reported results with our ongoing growth strategy. As a result, beginning in the fourth quarter of 2025 we report our financial results as a single reportable segment. For further segment reporting and geographic information, refer to Note 13 of the Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.
We derive our revenue from (i) dealer subscription fees, (ii) advertising from auto manufacturers and other brand advertisers, and (iii) partnerships with financing services companies.
For the three months ended March 31, 2026, we generated revenue of $243.6 million, a 15% increase from $212.2 million of revenue for the three months ended March 31, 2025.
For the three months ended March 31, 2026, we generated net income from continuing operations of $32.2 million and Adjusted EBITDA from continuing operations, a non-GAAP financial measure, of $80.2 million, compared to net income from continuing operations of $42.1 million and Adjusted EBITDA from continuing operations of $68.7 million for the three months ended March 31, 2025.
See below for more information regarding our use and reconciliation of Adjusted EBITDA from continuing operations and other non-GAAP financial measures.
22
Table of Contents
Key Business Metrics
We regularly review a number of metrics, including the key metrics listed below, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections, and make operating and strategic decisions. We believe it is important to evaluate these metrics, as applicable, for the U.S. and International geographic regions. The International region derives revenue from customers outside of the U.S. International markets perform differently from the U.S. market due to a variety of factors, including our operating history in each market, our rate of investment, market size, market maturity, competition, and other dynamics unique to each country.
Monthly Unique Users
For each of our websites, we define a monthly unique user as an individual who has visited any such website and taken a Visitor Action (as defined below) within a calendar month, based on data as measured by Google Analytics 4, or GA4. We calculate average monthly unique users as the sum of the monthly unique users of each of our websites in a defined period, divided by the number of months in that period. We count a unique user the first time a computer or mobile device with a unique device identifier accesses any of our websites or application during a calendar month and takes an action on such website or in such application, such as performing a search, visiting vehicle detail pages, and connecting with a dealer, which we refer to as a Visitor Action. If an individual accesses a website or application using a different device within a given month, the first Visitor Action taken by each such device is counted as a separate unique user. If an individual uses multiple browsers on a single device and/or clears their cookies and returns to our website or application and takes a Visitor Action within a calendar month, each such Visitor Action is counted as a separate unique user. We eliminate any duplicate unique users that may arise when users visit a webview within our native application.
We are subject to evolving privacy laws governing cookies and tracking technologies. For example, in the U.K. informed consent is required for the placement of certain cookies or similar tracking technologies on an individual’s device. Consent is tightly defined and includes a prohibition on pre-checked consents and a requirement to obtain separate consents for each type of cookie or similar technology. As a result of privacy regulations that require user consent for tracking technologies, such as those within the U.K., our ability to identify and measure our average monthly unique users is more limited, which could result in an undercount of actual average monthly unique users. Conversely, interactions with our websites generated by bots and other automated mechanisms may inflate GA4 data, which could lead to an overcount of average monthly unique users.
We view our average monthly unique users as a key indicator of the quality of our user experience, the effectiveness of our advertising and traffic acquisition, and the strength of our brand awareness. Measuring unique users is important to us and we believe it provides useful information to our investors because our revenue depends, in part, on our ability to provide dealers with connections to our users and exposure to our audience. We define connections as interactions between consumers and dealers on our marketplace through phone calls, email, managed text and chat, and clicks to access the dealer’s website or map directions to the dealership.
|
|
Three Months Ended |
|
|||||
Average Monthly Unique Users |
|
2026 (1) |
|
|
2025 |
|
||
|
|
(in thousands) |
|
|||||
U.S. |
|
|
36,584 |
|
|
|
35,012 |
|
International |
|
|
8,634 |
|
|
|
10,630 |
|
Total |
|
|
45,218 |
|
|
|
45,642 |
|
23
Table of Contents
Monthly Sessions
We define monthly sessions as the number of distinct visits to our websites that include a Visitor Action that take place each month within a given time frame, as measured and defined by GA4. We calculate average monthly sessions as the sum of the monthly sessions in a defined period, divided by the number of months in that period. A session is defined as beginning with the first Visitor Action from a computer or mobile device and ending at the earliest of when a user closes their browser window or after 30 minutes of inactivity. We eliminate any duplicate monthly sessions that may arise when users visit a webview within our native application.
We are subject to evolving privacy laws governing cookies and tracking technologies. For example, in the U.K. informed consent is required for the placement of certain cookies or similar tracking technologies on an individual’s device. Consent is tightly defined and includes a prohibition on pre-checked consents and a requirement to obtain separate consents for each type of cookie or similar technology. As a result of privacy regulations that require user consent for tracking technologies, such as those within the U.K., our ability to identify and measure our average monthly sessions is more limited, which could result in an undercount of actual average monthly sessions. Conversely, interactions with our websites generated by bots and other automated mechanisms may inflate GA4 data, which could lead to an overcount of average monthly sessions.
We believe that measuring the volume of sessions in a time period, when considered in conjunction with the number of unique users in that time period, is an important indicator to us of consumer satisfaction and engagement with our marketplace, and we believe it provides useful information to our investors because the more satisfied and engaged consumers we have, the more valuable our service is to dealers.
|
|
Three Months Ended |
|
|||||
Average Monthly Sessions |
|
2026 (1) |
|
|
2025 |
|
||
|
|
(in thousands) |
|
|||||
U.S. |
|
|
90,641 |
|
|
|
85,716 |
|
International |
|
|
18,698 |
|
|
|
22,225 |
|
Total |
|
|
109,339 |
|
|
|
107,941 |
|
Number of Paying Dealers
We define a paying dealer as a dealer account with an active, paid subscription at the end of a defined period. The number of paying dealers we have is important to us and we believe it provides valuable information to investors because it is indicative of the value proposition of our products, as well as our sales and marketing success and opportunity, including our ability to retain paying dealers and develop new dealer relationships.
|
|
As of March 31, |
|
|||||
Number of Paying Dealers |
|
2026 |
|
|
2025 |
|
||
U.S. |
|
|
26,116 |
|
|
|
25,153 |
|
International |
|
|
8,480 |
|
|
|
7,219 |
|
Total |
|
|
34,596 |
|
|
|
32,372 |
|
24
Table of Contents
Quarterly Average Revenue per Subscribing Dealer (QARSD)
We define QARSD, which is measured at the end of a fiscal quarter, as the revenue primarily from subscription products during that trailing quarter divided by the average number of paying dealers during the quarter. We calculate the average number of paying dealers for a period by adding the number of paying dealers at the end of such period and the end of the prior period and dividing by two. This information is important to us, and we believe it provides useful information to investors, because we believe that our ability to grow QARSD is an indicator of the value proposition of our products and the return on investment, or ROI, that our paying dealers realize from our products. In addition, increases in QARSD, which we believe reflect the value of exposure to our engaged audience in relation to subscription cost, are driven in part by our ability to grow the volume of connections to our users and the quality of those connections, which result in increased opportunity to upsell package levels and cross-sell additional products to our paying dealers.
|
|
Three Months Ended |
|
|||||
Quarterly Average Revenue per Subscribing Dealer (QARSD) |
|
2026 |
|
|
2025 |
|
||
U.S. |
|
$ |
7,996 |
|
|
$ |
7,369 |
|
International |
|
$ |
2,468 |
|
|
$ |
2,073 |
|
Consolidated |
|
$ |
6,647 |
|
|
$ |
6,173 |
|
Adjusted EBITDA from Continuing Operations
To provide investors with additional information regarding our financial results, we have presented within this Quarterly Report Adjusted EBITDA from continuing operations, which is a non‑GAAP financial measure. This non‑GAAP financial measure is not based on any standardized methodology prescribed by GAAP, and is not necessarily comparable to any similarly titled measures presented by other companies.
We define Adjusted EBITDA from continuing operations as net income from continuing operations, adjusted to exclude: depreciation and amortization, stock‑based compensation expense, transaction-related expenses, impairments, other income, net, and provision for income taxes.
We use Adjusted EBITDA from continuing operations within this Quarterly Report because it is a key measure used by our management and Board of Directors to understand and evaluate our operating performance, generate future operating plans, and make strategic decisions regarding the allocation of capital. We believe Adjusted EBITDA from continuing operations helps identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude. Accordingly, we believe that Adjusted EBITDA from continuing operations provides useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects, and allowing for greater transparency with respect to key financial metrics used by our management in its financial and operational decision‑making.
Our Adjusted EBITDA from continuing operations is not prepared in accordance with GAAP, and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA from continuing operations rather than net income from continuing operations, which is the most directly comparable GAAP equivalent. Some of these limitations are that Adjusted EBITDA from continuing operations excludes:
25
Table of Contents
In addition, other companies, including companies in our industry, may calculate Adjusted EBITDA from continuing operations differently, which reduces its usefulness as a comparative measure.
Because of these limitations, we consider, and you should consider, Adjusted EBITDA from continuing operations together with other operating and financial performance measures presented in accordance with GAAP.
For the three months ended March 31, 2026 and 2025, the following table presents a reconciliation of Adjusted EBITDA from continuing operations to net income from continuing operations, the most directly comparable measure calculated in accordance with GAAP, for each of the periods presented.
|
|
Three Months Ended |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(dollars in thousands) |
|
|||||
Reconciliation of Adjusted EBITDA from continuing operations |
|
|
|
|
|
|
||
Net income from continuing operations |
|
$ |
32,228 |
|
|
$ |
42,074 |
|
Depreciation and amortization |
|
|
7,170 |
|
|
|
5,679 |
|
Stock-based compensation expense |
|
|
13,272 |
|
|
|
12,383 |
|
Transaction-related expenses |
|
|
— |
|
|
|
2 |
|
Impairments |
|
|
19,711 |
|
|
|
— |
|
Other income, net |
|
|
(1,065 |
) |
|
|
(2,796 |
) |
Provision for income taxes |
|
|
8,916 |
|
|
|
11,376 |
|
Adjusted EBITDA from continuing operations |
|
$ |
80,232 |
|
|
$ |
68,718 |
|
26
Table of Contents
Components of Unaudited Condensed Consolidated Income Statements
Revenue
We derive our revenue from (i) dealer subscription fees, (ii) advertising from auto manufacturers and other brand advertisers, and (iii) partnerships with financing services companies.
Dealer Subscription Revenue
We offer multiple types of Listings packages to our dealers for our CarGurus platform (availability varies on our marketplaces): Restricted Listings, which is free; and various levels of Listings packages, each of which require a paid subscription under a monthly, quarterly, semiannual, or annual subscription basis.
Our dealer Listings subscription packages generally auto-renew on a monthly basis and are cancellable by dealers with 30 days’ advance notice prior to the commencement of the applicable renewal term. Subscription pricing is determined based on a dealer’s inventory size, region, and our assessment of the connections and ROI the platform will provide them and is subject to discounts and/or fee reductions that we may offer from time to time. We also offer all dealers on the platform access to our Dealer Dashboard, which includes a performance summary, dealer insights features, and user review management platform. Only dealers subscribing to a paid Listings package receive access to certain additional features.
We also offer dealers subscribing to certain of our Listings packages additional exposure and lead enhancements, such as Audience Targeting. Through Audience Targeting, dealers can buy advertising that appears on other sites on the internet and/or on high-converting social media platforms. Such advertisements can be targeted by the user’s geography, search history, CarGurus website activity, and a number of other factors, allowing dealers to increase their visibility with in-market consumers and drive qualified traffic for dealers.
We also offer dealers subscribing to certain of our Listings packages other subscription products such as Digital Deal, which allows shoppers to complete much of the vehicle-purchase process online through the Dealers’ Listings page and gives dealers higher quality leads through upfront consumer-provided information.
We also offer dealers subscribing to certain of our Listings packages other subscription products such as Sell My Car, which allows dealers to pay for leads to receive direct access to shoppers actively looking to sell their vehicles. Dealers can acquire inventory from shoppers who are looking to sell directly through the CarGurus Sell My Car page.
Advertising Revenue
We offer non-dealer advertising to auto manufacturers and other brand advertisers sold on a cost-per-thousand impressions basis. An impression is an advertisement loaded on a web page. We also have advertising sold on a cost-per-click basis. Pricing is primarily based on advertisement size and position on our websites and mobile applications. Auto manufacturers and other brand advertisers can execute advertising campaigns that are targeted across a wide variety of parameters, including demographic groups, behavioral characteristics, and, for automotive campaigns, specific auto brands, categories such as Certified Pre-Owned, and segments such as hybrid vehicles. We do not provide minimum impression guarantees or other types of minimum guarantees in our contracts with customers. Advertising is also sold indirectly through revenue-sharing arrangements with advertising exchange partners.
Financing Revenue
We also derive revenue from partnerships with certain financing services companies pursuant to which we enable eligible consumers on our CarGurus U.S. website to pre-qualify for financing on cars from dealerships that offer financing through such companies. We primarily generate revenue from these partnerships based on the number of funded loans from consumers who pre-qualify with our lending partners through our site.
27
Table of Contents
Cost of Revenue
Cost of revenue includes expenses related to supporting and hosting service offerings. These expenses include personnel and related expenses for our customer support team, including salaries, benefits, incentive compensation, and stock-based compensation; third-party service provider expenses such as advertising, data, and hosting expenses; amortization of developed technology; amortization and impairment of capitalized website development; amortization of capitalized hosting arrangements; and allocated overhead expenses.
We allocate overhead expenses, such as rent and facility expenses, software expense, and employee benefit expense, to all departments based on headcount. As such, general overhead expenses are reflected in cost of revenue and each operating expense category.
Operating Expenses
Sales and Marketing
Sales and marketing expense consists primarily of personnel and related expenses for our sales and marketing team, including salaries, benefits, incentive compensation, commissions, and stock-based compensation; expenses associated with consumer marketing, such as traffic acquisition, brand building, and public relations activities; expenses associated with dealer marketing, such as content marketing, customer and promotional events, and industry events; software subscription expenses; consulting services; amortization of capitalized hosting arrangements; and allocated overhead expenses. A portion of our commissions that are related to obtaining a new contract are capitalized and amortized over the estimated benefit period of customer relationships. Other than commissions amortization, all other sales and marketing expenses are expensed as incurred. We expect sales and marketing expense to fluctuate from quarter to quarter due to seasonality and as we respond to changes in the macroeconomic and competitive landscapes affecting our existing dealers, consumer audience, and brand awareness.
Product, Technology, and Development
Product, technology, and development expense consists primarily of personnel and related expenses for our research and development team, including salaries, benefits, incentive compensation, and stock-based compensation; software subscription expenses; consulting services; and allocated overhead expenses. Other than website development, internal-use software, and hosting arrangement expenses, research and development expenses are expensed as incurred. We expect product, technology, and development expense to increase from quarter to quarter as we invest in additional engineering resources to develop innovative new solutions and make improvements to our existing platform.
General and Administrative
General and administrative expense consists primarily of personnel and related expenses for our executive, finance, legal, people and talent, and administrative teams, including salaries, benefits, incentive compensation, and stock-based compensation; expenses associated with professional fees for audit, tax, external legal, and consulting services; payment processing and billing expenses; insurance expenses; software subscription expenses; and allocated overhead expenses. General and administrative expense is expensed as incurred. We expect general and administrative expense to increase as we continue to scale our business.
Impairment
During the three months ended March 31, 2026, we identified a triggering event requiring an impairment test for the 121 First Street lease , which we intend to sublease, primarily due to lower anticipated rental rates. We performed an updated fair value analysis of the lease, and subsequently recognized non-cash impairment charges of $14.7 million related to operating lease right-of-use asset and $4.5 million related to leasehold improvements and furniture and fixtures, which were recognized within impairment operating expenses in the Unaudited Condensed Consolidated Income Statements. For further discussion of the lease impairment, refer to Note 9 of the Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.
28
Table of Contents
Depreciation and Amortization
Depreciation and amortization expense consists of depreciation on property and equipment and amortization of intangible assets and internal-use software.
Other Income, Net
Other income, net consists primarily of interest income earned on our cash and cash equivalents, as well as foreign exchange gains and losses.
Provision for Income Taxes
The provision for income taxes consists of federal and state income taxes in the U.S. and taxes in foreign jurisdictions in which we operate. For the three months ended March 31, 2026 and 2025, a provision for income taxes was recognized as a result of the consolidated taxable income position.
Results of Operations
For the three months ended March 31, 2026 and 2025, the Unaudited Condensed Consolidated Income Statements were as follows:
|
|
Three Months Ended |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(dollars in thousands) |
|
|||||
Revenue |
|
$ |
243,555 |
|
|
$ |
212,235 |
|
Cost of revenue |
|
|
18,934 |
|
|
|
14,343 |
|
Gross profit |
|
|
224,621 |
|
|
|
197,892 |
|
Operating expenses |
|
|
|
|
|
|
||
Sales and marketing |
|
|
97,484 |
|
|
|
83,669 |
|
Product, technology, and development |
|
|
37,671 |
|
|
|
35,028 |
|
General and administrative |
|
|
26,481 |
|
|
|
24,785 |
|
Impairments |
|
|
19,201 |
|
|
|
— |
|
Depreciation and amortization |
|
|
3,705 |
|
|
|
3,756 |
|
Total operating expenses |
|
|
184,542 |
|
|
|
147,238 |
|
Income from continuing operations |
|
|
40,079 |
|
|
|
50,654 |
|
Other income, net |
|
|
|
|
|
|
||
Interest income |
|
|
1,671 |
|
|
|
3,098 |
|
Other expense, net |
|
|
(606 |
) |
|
|
(302 |
) |
Total other income, net |
|
|
1,065 |
|
|
|
2,796 |
|
Income from continuing operations before income taxes |
|
|
41,144 |
|
|
|
53,450 |
|
Provision for income taxes |
|
|
8,916 |
|
|
|
11,376 |
|
Net income from continuing operations |
|
|
32,228 |
|
|
|
42,074 |
|
Net loss from discontinued operations, net of tax benefits |
|
|
— |
|
|
|
(3,029 |
) |
Consolidated net income |
|
$ |
32,228 |
|
|
$ |
39,045 |
|
29
Table of Contents
For the three months ended March 31, 2026 and 2025, the Unaudited Condensed Consolidated Income Statements as a percentage of total revenue were as follows (amounts in the table below may not sum due to rounding):
|
|
Three Months Ended |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Revenue |
|
|
100 |
% |
|
|
100 |
% |
Cost of revenue |
|
|
8 |
|
|
|
7 |
|
Gross profit |
|
|
92 |
|
|
|
93 |
|
Operating expenses |
|
|
|
|
|
|
||
Sales and marketing |
|
|
40 |
|
|
|
39 |
|
Product, technology, and development |
|
|
15 |
|
|
|
17 |
|
General and administrative |
|
|
11 |
|
|
|
12 |
|
Impairments |
|
|
8 |
|
|
|
— |
|
Depreciation and amortization |
|
|
2 |
|
|
|
2 |
|
Total operating expenses |
|
|
76 |
|
|
|
69 |
|
Income from continuing operations |
|
|
16 |
|
|
|
24 |
|
Other income, net |
|
|
|
|
|
|
||
Interest income |
|
|
1 |
|
|
|
1 |
|
Other expense, net |
|
|
(0 |
) |
|
|
(0 |
) |
Total other income, net |
|
|
0 |
|
|
|
1 |
|
Income from continuing operations before income taxes |
|
|
17 |
|
|
|
25 |
|
Provision for income taxes |
|
|
4 |
|
|
|
5 |
|
Net income from continuing operations |
|
|
13 |
|
|
|
20 |
|
Net loss from discontinued operations, net of tax benefits |
|
|
— |
|
|
|
(1 |
) |
Consolidated net income |
|
|
13 |
% |
|
|
18 |
% |
For the three months ended March 31, 2026 and 2025
Revenue
|
|
Three Months Ended |
|
|
Change |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
Amount |
|
|
% |
|
||||
|
|
(dollars in thousands) |
|
|||||||||||||
Revenue |
|
$ |
243,555 |
|
|
$ |
212,235 |
|
|
$ |
31,320 |
|
|
|
15 |
% |
Percentage of total revenue |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
||
Revenue increased $31.3 million, or 15%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The increase was due primarily to an increase in dealer subscription revenue as a result of growth in QARSD, which was driven by signing on new dealers at market rates, and revenue expansion driven by subscription tier upgrades, broader adoption of add-on products, and like-for-like price increases for existing dealers.
Cost of Revenue
|
|
Three Months Ended |
|
|
Change |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
Amount |
|
|
% |
|
||||
|
|
(dollars in thousands) |
|
|||||||||||||
Cost of Revenue |
|
$ |
18,934 |
|
|
$ |
14,343 |
|
|
$ |
4,591 |
|
|
|
32 |
% |
Percentage of total revenue |
|
|
8 |
% |
|
|
7 |
% |
|
|
|
|
|
|
||
30
Table of Contents
Cost of revenue increased $4.6 million, or 32%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025, and represented 8% of total revenue for the three months ended March 31, 2026, compared to 7% of total revenue for the three months ended March 31, 2025. The increase was due primarily to a $1.5 million increase in amortization due to new capitalized website development projects, a $1.3 million increase in data center and hosting costs due to higher overall usage, and a $0.7 million increase in spend related to provisioning advertising campaigns on external websites.
Operating Expenses
Sales and Marketing Expense
|
|
Three Months Ended |
|
|
Change |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
Amount |
|
|
% |
|
||||
|
|
(dollars in thousands) |
|
|||||||||||||
Sales and marketing |
|
$ |
97,484 |
|
|
$ |
83,669 |
|
|
$ |
13,815 |
|
|
|
17 |
% |
Percentage of total revenue |
|
|
40 |
% |
|
|
39 |
% |
|
|
|
|
|
|
||
Sales and marketing expense increased $13.8 million, or 17%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The increase was due primarily to a $7.3 million increase in advertising and marketing expense for our performance marketing vendors and brand awareness campaigns, a $3.1 million increase in personnel expenses due to an increase in headcount and merit increases, a $1.1 million increase in software and consulting expense, and a $1.0 million increase in commissions expense due to revenue growth.
Product, Technology, and Development Expense
|
|
Three Months Ended |
|
|
Change |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
Amount |
|
|
% |
|
||||
|
|
(dollars in thousands) |
|
|||||||||||||
Product, technology, and development |
|
$ |
37,671 |
|
|
$ |
35,028 |
|
|
$ |
2,643 |
|
|
|
8 |
% |
Percentage of total revenue |
|
|
15 |
% |
|
|
17 |
% |
|
|
|
|
|
|
||
Product, technology, and development expense increased $2.6 million, or 8%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The increase was due primarily to a $1.6 million increase in consulting expense and a $1.5 million increase in personnel expenses due to an increase in headcount and merit increases.
General and Administrative Expense
|
|
Three Months Ended |
|
|
Change |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
Amount |
|
|
% |
|
||||
|
|
(dollars in thousands) |
|
|||||||||||||
General and administrative |
|
$ |
26,481 |
|
|
$ |
24,785 |
|
|
$ |
1,696 |
|
|
|
7 |
% |
Percentage of total revenue |
|
|
11 |
% |
|
|
12 |
% |
|
|
|
|
|
|
||
General and administrative expense increased $1.7 million, or 7%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The increase was due primarily to a $1.3 million increase in professional service expenses primarily driven by legal and consulting expenses, a $0.7 million increase in stock based compensation expense due to new grants partially offset by completed vesting of existing awards and forfeitures from employee departures, and a $1.1 million increase in general expenses. The increase was offset in part by a $1.5 million decrease in indirect tax expense.
31
Table of Contents
Impairment Expense
|
|
Three Months Ended |
|
|
Change |
|||||||||
|
|
2026 |
|
|
2025 |
|
|
Amount |
|
|
% |
|||
|
|
(dollars in thousands) |
||||||||||||
Impairments |
|
$ |
19,201 |
|
|
$ |
— |
|
|
$ |
19,201 |
|
|
NM(1) |
Percentage of total revenue |
|
|
8 |
% |
|
—% |
|
|
|
|
|
|
||
Impairment expense increased $19.2 million in the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The increase was due primarily to the impairment of the 121 First Street lease during the three months ended March 31, 2026. For further discussion of the lease impairment, refer to Note 9 of the Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.
Depreciation and Amortization Expense
|
|
Three Months Ended |
|
|
Change |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
Amount |
|
|
% |
|
||||
|
|
(dollars in thousands) |
|
|||||||||||||
Depreciation and amortization |
|
$ |
3,705 |
|
|
$ |
3,756 |
|
|
$ |
(51 |
) |
|
|
(1 |
)% |
Percentage of total revenue |
|
|
2 |
% |
|
|
2 |
% |
|
|
|
|
|
|
||
Depreciation and amortization expense remained relatively flat in the three months ended March 31, 2026, compared to the three months ended March 31, 2025.
Other Income, net
|
|
Three Months Ended |
|
|
Change |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
Amount |
|
|
% |
|
||||
|
|
(dollars in thousands) |
|
|||||||||||||
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest income |
|
$ |
1,671 |
|
|
$ |
3,098 |
|
|
$ |
(1,427 |
) |
|
|
(46 |
)% |
Other expense, net |
|
|
(606 |
) |
|
|
(302 |
) |
|
|
(304 |
) |
|
|
(101 |
)% |
Total other income, net |
|
$ |
1,065 |
|
|
$ |
2,796 |
|
|
$ |
(1,731 |
) |
|
|
(62 |
)% |
Percentage of total revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest income |
|
|
1 |
% |
|
|
1 |
% |
|
|
|
|
|
|
||
Other expense, net |
|
|
(0 |
) |
|
|
(0 |
) |
|
|
|
|
|
|
||
Total other income, net |
|
|
0 |
% |
|
|
1 |
% |
|
|
|
|
|
|
||
Total other income, net decreased $1.7 million, or 62%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The $1.4 million decrease in interest income was due primarily to lower average cash balances and lower interest rates year over year.
Provision for Income Taxes
|
|
Three Months Ended |
|
|
Change |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
Amount |
|
|
% |
|
||||
|
|
(dollars in thousands) |
|
|||||||||||||
Provision for income taxes |
|
$ |
8,916 |
|
|
$ |
11,376 |
|
|
$ |
(2,460 |
) |
|
|
(22 |
)% |
Percentage of total revenue |
|
|
4 |
% |
|
|
5 |
% |
|
|
|
|
|
|
||
32
Table of Contents
Provision for income taxes changed $2.5 million in the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The decrease was due primarily to decreased profitability resulting from the recording of the lease impairment expense.
Liquidity and Capital Resources
Cash, Cash Equivalents, and Borrowing Capacity
As of March 31, 2026 and December 31, 2025, our principal sources of liquidity were cash and cash equivalents of $72.0 million and $190.5 million, respectively. As of March 31, 2026 and December 31, 2025, our borrowing capacity under the 2022 Revolver (as defined below) was $390.6 million.
Sources and Uses of Cash
The cash flows related to discontinued operations for the three months ended March 31, 2025, have not been separated. Accordingly, the Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2025, and the following discussions include the results of continuing and discontinued operations. For additional information on discontinued operations, including significant non-cash items and capital expenditures of discontinued operations, refer to Note 3 of the Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.
During the three months ended March 31, 2026 and 2025, our cash flows from operating, investing, and financing activities, as reflected in the Unaudited Condensed Consolidated Statements of Cash Flows, were as follows:
|
|
Three Months Ended |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(dollars in thousands) |
|
|||||
Net cash provided by operating activities |
|
$ |
69,849 |
|
|
$ |
67,879 |
|
Net cash used in investing activities |
|
|
(6,692 |
) |
|
|
(7,631 |
) |
Net cash used in financing activities |
|
|
(181,013 |
) |
|
|
(191,477 |
) |
Impact of foreign currency on cash |
|
|
(613 |
) |
|
|
710 |
|
Net decrease in cash, cash equivalents, and restricted cash |
|
$ |
(118,469 |
) |
|
$ |
(130,519 |
) |
Our operations have been financed primarily from operating activities. During the three months ended March 31, 2026 and 2025, we generated cash from operating activities of $69.8 million and $67.9 million, respectively.
On September 26, 2022, we entered into a Credit Agreement with PNC Bank, National Association, as administrative agent and collateral agent and an L/C Issuer (as defined in the Credit Agreement), and the other lenders, L/C Issuers, and parties thereto from time to time, or the Credit Agreement. The Credit Agreement consists of a revolving credit facility, or the 2022 Revolver, which allows us to borrow up to $400.0 million, $50.0 million of which may be comprised of a letter of credit sub-facility, or 2022 Revolver Sub-facility. The borrowing capacity under the Credit Agreement may be increased in accordance with the terms and subject to the adjustments as set forth in the Credit Agreement. Specifically, the borrowing capacity may be increased by an amount up to the greater of $250.0 million or 100% of Four Quarter Consolidated EBITDA (as defined in the Credit Agreement) if certain criteria are met and subject to certain restrictions. Any such increase requires lender approval. Proceeds of any borrowings may be used for general corporate purposes. The 2022 Revolver is scheduled to mature on September 26, 2027. As of March 31, 2026 and December 31, 2025, there were no borrowings and $9.4 million in letters of credit outstanding under the 2022 Revolver Sub-facility associated with our leases, which reduced the borrowing capacity under the 2022 Revolver to $390.6 million.
33
Table of Contents
We believe that our existing sources of liquidity, including access to the 2022 Revolver, will be sufficient to fund our operations for at least the next 12 months from the date of the filing of this Quarterly Report. Our future capital requirements will depend on many factors, including our revenue; expenses associated with our sales and marketing activities and the support of our product, technology, and development efforts; activity under the 2026 Share Repurchase Program (as defined below); and our investments in international markets. Cash from operations could also be affected by various risks and uncertainties, including but not limited to macroeconomic effects and other risks detailed more specifically in the “Risk Factors” section in Part I, Item 1A in our Annual Report.
In February 2026 we announced that our Board of Directors authorized a program pursuant to which we may purchase up to $250.0 million of our Class A common stock, or the 2026 Share Repurchase Program. Share repurchases under the 2026 Share Repurchase Program may be made through a variety of methods, including but not limited to open market purchases, privately negotiated transactions, and transactions that may be effected pursuant to one or more plans under Rule 10b5-1 and/or Rule 10b-18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The 2026 Share Repurchase Program does not obligate us to repurchase any minimum dollar amount or number of shares. The 2026 Share Repurchase Program has an expiration date of December 31, 2026, and prior to its expiration may be modified, suspended, or discontinued by our Board of Directors at any time without prior notice. All repurchased shares under the 2026 Share Repurchase Program will be retired. We have funded share repurchases and expect to continue to fund share repurchases under the 2026 Share Repurchase Program through cash on hand and cash generated from operations. During the three months ended March 31, 2026, we repurchased and retired 5,341,712 shares of our Class A common stock for $175.0 million, exclusive of commissions and excise tax, at an average cost of $32.76 per share, under the 2026 Share Repurchase Program. As of March 31, 2026, we had remaining authorization to purchase up to $75.0 million of our Class A common stock under the 2026 Share Repurchase Program.
In November 2024 we announced that our Board of Directors authorized a share repurchase program, or the Original 2025 Share Repurchase Program, pursuant to which we could purchase up to $200.0 million of our Class A common stock. In August 2025 we announced that our Board of Directors amended the Original 2025 Share Repurchase Program to increase the authorization by an additional $150.0 million, for a total authorization to purchase up to $350.0 million of our Class A common stock, and extended the expiration of the Original 2025 Share Repurchase Program from December 31, 2025 to July 31, 2026, or as amended, the 2025 Share Repurchase Program. The 2025 Share Repurchase Program was completed in November 2025. All repurchased shares under the 2025 Share Repurchase Program were retired. During the three months ended March 31, 2025, we repurchased and retired 5,919,435 shares of our Class A common stock for $184.2 million, exclusive of commissions and excise tax, at an average cost of $31.12 per share under the 2025 Share Repurchase Program.
To the extent that our operating income, existing cash, cash equivalents, and our borrowing capacity under the 2022 Revolver are insufficient to fund our future activities, we may need to raise additional funds through a public or private equity or debt financing. Additional funds may not be available on terms favorable to us, or at all. See “Risk Factors—Risks Related to Our Operations—We may require additional capital to pursue our business objectives and respond to business opportunities, challenges, or unforeseen circumstances. If we are unable to generate sufficient cash flows or if capital is not available to us, our business, operating results, financial condition, and prospects could be adversely affected.” in Part I, Item 1A in our Annual Report.
Operating Activities
Net cash provided by operating activities of $69.8 million during the three months ended March 31, 2026, was due primarily to consolidated net income of $32.2 million, adjusted for $19.7 million of impairment primarily related to the 121 First Street lease, $13.3 million of stock-based compensation expense, $7.2 million of depreciation and amortization expense, and $4.7 million of amortization of deferred contract costs. Net cash provided by operating activities was also due to a $4.7 million decrease in prepaid expenses, prepaid income taxes, and other current assets, and was offset in part by a $7.1 million decrease in accrued expenses, accrued income taxes, and other current liabilities and a $4.4 million increase in deferred contract costs primarily due to commission capitalization.
34
Table of Contents
Net cash provided by operating activities of $67.9 million during the three months ended March 31, 2025, was due primarily to consolidated net income of $39.0 million, adjusted for $12.9 million of stock-based compensation expense, $6.6 million of depreciation and amortization expense, and $3.8 million of amortization of deferred contract costs. Net cash provided by operating activities was also attributable in part to a $4.6 million increase in lease obligations primarily due to interest accretion, right-of-use asset amortization, and tenant improvement allowance reimbursement, offset in part by rent payments. Net cash provided by operating activities was also due in part to a $6.8 million decrease in prepaid expenses, prepaid income taxes, and other current assets and a $4.1 million increase in accounts payable due to increased marketing spend as a result of seasonality, as well as the timing of payments. Net cash provided by operating activities was offset in part by a $5.6 million decrease in accrued expenses, accrued income taxes, and other current liabilities due primarily to a decrease in accrued bonuses following the payout of the fiscal year 2024 bonuses during the quarter, and a $4.7 million increase in deferred contract costs primarily due to commission capitalization.
Investing Activities
Net cash used in investing activities of $6.7 million during the three months ended March 31, 2026, was due primarily to $6.3 million in capitalized website development costs due to continued investment in our product offerings.
Net cash used in investing activities of $7.6 million during the three months ended March 31, 2025, was due to $5.4 million in capitalization of website development costs related to continued investments on our product offerings and $2.2 million in purchases of property and equipment related to internal-use software as well as our headquarters at 1001 Boylston Street.
Financing Activities
Net cash used in financing activities of $181.0 million during the three months ended March 31, 2026, was due primarily to $174.4 million in repurchases of our Class A common stock under the 2026 Share Repurchase Program and $6.6 million in payments of withholding taxes on net share settlements of restricted stock units.
Net cash used in financing activities of $191.5 million during the three months ended March 31, 2025, was due primarily to $182.8 million in repurchases of our Class A common stock under the 2025 Share Repurchase Program and $9.0 million in payment of withholding taxes on net share settlements of restricted stock units.
Contractual Obligations and Known Future Cash Requirements
As of March 31, 2026, there were no material changes in our contractual obligations and commitments from those disclosed in our Annual Report, other than those appearing in the notes to the Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report, which are hereby incorporated by reference.
Seasonality
Across the retail automotive industry, consumer activity tends to be highest in the spring and summer months, aligning with tax refund season and increased discretionary spending, as well as the rollout of new vehicle models. This seasonality in vehicle purchasing behavior can influence dealer advertising budgets and inventory levels, which, in turn, could impact demand for our products and services.
Historically, our operating results have been more influenced by macroeconomic conditions that impact the volume of vehicle sales, such as slower growth or recession, higher interest rates, unemployment, inflation, consumer confidence in the economy, consumer debt levels, labor disruptions, work stoppages, or strikes, geopolitical conflicts, foreign currency exchange rate fluctuations, and other matters that influence consumer spending and preferences, than by consistent seasonal patterns.
35
Table of Contents
To date, our operating results have not been materially impacted by the general seasonality of the automotive industry. However, as our platform and offerings continue to scale, including our growing suite of software and data products for consumers and dealers, we may become more susceptible to seasonal trends that affect vehicle transactions, consumer engagement, or dealer marketing behavior.
Accordingly, revenue and cost of revenue related to volume will fluctuate on a quarterly basis. Typical seasonality trends may not be observed in periods where other external factors, such as changes in international trade policies, tariffs, higher interest rates, and other macroeconomic issues, more significantly impact the industry.
Off-Balance Sheet Arrangements
As of March 31, 2026 and December 31, 2025, we did not have any off-balance sheet arrangements or material leases that are less than 12 months in duration, that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures, or capital resources.
Critical Accounting Estimates
The preparation of the Unaudited Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period.
Although we regularly assess these estimates, actual results could differ materially from these estimates. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from management’s estimates if these results differ from historical experience, or other assumptions do not turn out to be substantially accurate, even if such assumptions are reasonable when made. Changes in estimates are recognized in the period in which they become known.
Critical estimates relied upon in preparing the Unaudited Condensed Consolidated Financial Statements include the determination of variable consideration in our revenue recognition and the capitalization and useful lives of product, technology, and development costs for website development, internal-use software, and hosting arrangements. Accordingly, we consider these to be our critical accounting estimates and believe that of our significant accounting policies, these involve the greatest degree of judgment and complexity.
For a detailed explanation of the judgments made in these areas, refer to Note 2 of the Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report.
Recently Issued Accounting Pronouncements
Information concerning recently issued accounting pronouncements can be found in Note 2 of the Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.
36
Table of Contents
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Market risk represents the risk of loss that may affect our financial position due to adverse changes in financial market prices and rates. We are exposed to market risks as described below.
Interest Rate Risk
As of March 31, 2026, our exposure to market risk associated with changes in interest rates related primarily to the 2022 Revolver, which allows us to borrow up to $400.0 million. The applicable interest rate is, at our option, based on a number of different benchmark rates and applicable spreads, as determined by the Consolidated Secured Net Leverage Ratio (as defined in Note 8 of the Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report). A fluctuation in interest rates does not have an impact on interest expense unless the 2022 Revolver is drawn upon. Such impact would also be dependent on the amount of the draw. As of March 31, 2026 and December 31, 2025, there were no borrowings and $9.4 million in letters of credit outstanding under the 2022 Revolver Sub-facility associated with our leases, which reduced the borrowing capacity under the 2022 Revolver to $390.6 million.
As of March 31, 2026 and December 31, 2025, we had cash and cash equivalents of $72.0 million and $190.5 million, respectively, which consisted of cash on deposit with banks and money market funds.
Such interest-earning instruments carry a degree of interest rate risk. For the three months ended March 31, 2026 and 2025, fluctuations resulting from changes in the interest rate environment in interest income have not been material to our business, financial condition, or results of operations. Given recent changes in the interest rate environment and in an effort to ensure liquidity, we expect variable returns from our cash equivalents for the foreseeable future.
We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. As circumstances change, we will continue to reassess our approach to managing these risks.
Inflation Risk
As of and for the three months ended March 31, 2026 and 2025, we did not believe that inflation had a material effect on our business, financial condition, or results of operations. However, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, operating results, and financial condition. Additionally, inflationary pressures could negatively impact vehicle purchasing behavior, which could have an adverse impact on our financial results.
Foreign Currency Exchange Risk
As of and for the three months ended March 31, 2026 and 2025, we had foreign currency exposures in the British pound, the Euro, and the Canadian dollar, but fluctuations resulting from exchange rates between these foreign currencies and the U.S. dollar have not been material to our business, financial condition, or results of operations. However, fluctuations in exchange rates in the future may have a material impact on our business, financial condition, or results of operations. We have not used any financial instruments to manage our foreign currency exchange risk exposure. As circumstances change, we will continue to reassess our approach to managing these risks.
37
Table of Contents
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Quarterly Report. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Based on such evaluation, our principal executive officer and principal financial officer has concluded that as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
38
Table of Contents
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not presently subject to any pending or threatened litigation that we believe, if determined adversely to us, would individually, or taken together, reasonably be expected to have a material adverse effect on our business or financial results.
Item 1A. Risk Factors.
Careful consideration should be given to the factors discussed in Part I, Item 1A, “Risk Factors,” in our Annual Report, which could materially affect our business, financial condition, or future results, in addition to the information set forth in this Quarterly Report.
39
Table of Contents
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Recent Sales of Unregistered Securities
None.
Purchases of Equity Securities
The following table summarizes information about our purchases of our Class A common stock for each of the months during the three months ended March 31, 2026:
Period |
|
Total Number of Shares of Common Stock Purchased |
|
|
Weighted Average Price Paid per Share of Common Stock(1) |
|
|
Total Number of Shares of Common Stock Purchased as Part of Publicly Announced Plans or Programs(2)(3) |
|
|
Maximum Number (or Approximate Dollar Value) of Shares of Common Stock that May Yet be Purchased Under the Plans or Programs |
|
||||
January 1, 2026 through January 31, 2026 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
February 1, 2026 through February 28, 2026 |
|
|
1,394,628 |
|
|
$ |
30.02 |
|
|
|
1,394,628 |
|
|
$ |
208,133 |
|
March 1, 2026 through March 31, 2026 |
|
|
3,947,084 |
|
|
$ |
33.73 |
|
|
|
3,947,084 |
|
|
$ |
74,998 |
|
Total |
|
|
5,341,712 |
|
|
$ |
32.76 |
|
|
|
5,341,712 |
|
|
$ |
74,998 |
|
40
Table of Contents
Item 5. Other Information
Rule 10b5-1 Plan Trading Arrangements
During the three months ended March 31, 2026, the following officer
Name & Title |
|
Date Adopted |
|
Aggregate Number of Shares of Class A Common Stock to be Purchased or Sold Pursuant to Trading Arrangement |
|
Expiration Date(1) |
|
|
Up to |
|
|||
|
|
|
|
|
|
|
Other than those disclosed above, none of our directors or officers
41
Table of Contents
Item 6. Exhibits.
The exhibits listed below are filed, furnished, or incorporated by reference into this Quarterly Report.
|
|
|
|
Incorporated by Reference |
|
|||||||
Exhibit Number |
|
Exhibit Description |
|
Form |
|
File Number |
|
Filing Date |
|
Exhibit Number |
|
Filed or Furnished Herewith |
31.1 |
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
|
|
|
|
X |
32.1* |
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
|
|
|
|
X |
101.INS |
|
Inline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
|
|
|
|
|
|
|
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents. |
|
|
|
|
|
|
|
|
|
X |
104 |
|
Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit) |
|
|
|
|
|
|
|
|
|
X |
* The certification furnished in Exhibit 32.1 hereto is deemed to accompany this Quarterly Report and will not be deemed “filed” for purposes of Section 18 of the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.
42
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
CarGurus, Inc. |
|
|
|
|
|
Date: May 7, 2026 |
|
By: |
/s/ Jason Trevisan |
|
|
|
Jason Trevisan |
|
|
|
Chief Executive Officer (Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer) |
43