CarGurus Inc - Class A
Q1 2025 Earnings
Market Reaction
S&P 500 over the same 30 days: +6.56%.
Did CARG Beat Earnings? Q1 2025 Results
CarGurus posted a mixed but fundamentally encouraging first quarter for 2025, beating on the bottom line while falling just short on the top line, as non-GAAP EPS of $0.46 cleared the $0.44 consensus by 5.50% even as revenue of $225.16 million came in 0.63% below estimates, rising 4.3% year-over-year. The clearest driver of the earnings strength was a dramatic shift in business mix: the company's winding down of its lower-margin CarOffer wholesale operation, where segment revenue collapsed 55% to $12.92 million, allowed gross margin to expand to 89% from 81% a year ago, lifting non-GAAP adjusted EBITDA 32% to $66.30 million and pushing the EBITDA margin to 29%. The core Marketplace business carried its weight, growing 13% to $212.24 million, with U.S. paying dealers up 3% to 25,153 and U.S. QARSD climbing 10% to $7,369. Looking ahead, CarGurus guided Q2 2025 total revenue of $222.00 million to $242.00 million and non-GAAP EPS of $0.52 to $0.58, though management noted the outlook excludes potential disruption from tariff-related shifts in dealer and consumer behavior.
- Marketplace revenue grew 13% YoY driven by deeper consumer and dealer engagement
- U.S. QARSD increased 10% YoY to $7,369 reflecting successful upselling and cross-selling
- Total paying dealers grew 4% YoY to 32,372
- Gross margin expanded to 89% from 81% YoY
- Non-GAAP Adjusted EBITDA margin expanded to 29% from 23% YoY
- Reduced cost of revenue driven by lower wholesale and product costs
“Our strong momentum in our Marketplace business continued into 2025, which grew 13% year-over-year. Across the company, we advanced our 2025 core drivers of value creation: expanding data-driven solutions that help dealers drive more profitable businesses, meeting the evolving needs of car shoppers with a more intelligent and seamless experience, and enabling customers to do more of the transaction online. As a result, this focused execution has translated into deeper consumer and dealer engagement and has expanded our market share.”
CarGurus CEO, on the earnings call
Forward Guidance & Outlook
For Q2 2025, CarGurus guided total revenue of $222.0 million to $242.0 million, marketplace revenue of $219.5 million to $224.5 million, non-GAAP adjusted EBITDA of $71.5 million to $79.5 million, and non-GAAP EPS of $0.52 to $0.58 (assuming 100.0 million diluted weighted-average shares outstanding). Guidance is based on recent market trends and industry conditions and excludes macro-level industry disruptions that could materially change dealer and consumer behavior, including tariff impacts and foreign currency exchange gains or losses.
CARG YoY Financials
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Figures from SEC filings and company reports. Not investment advice.