On November 7, 2024, CarGurus Inc (CARG, Financial) released its 8-K filing detailing the financial results for the third quarter of 2024. CarGurus Inc, a leading online automotive marketplace, connects buyers and sellers of new and used cars through its U.S. Marketplace and Digital Wholesale segments. The company reported a total revenue of $231.4 million, surpassing the analyst estimate of $223.54 million, while the earnings per share (EPS) of $0.21 fell short of the estimated $0.30.
Performance and Challenges
CarGurus Inc's third-quarter performance was marked by a 15% year-over-year increase in Marketplace revenue, reaching $204 million. However, the company faced significant challenges in its Digital Wholesale segment, where revenue declined by 34% to $27.3 million. This decline reflects broader industry challenges and highlights the need for strategic adjustments in this segment.
Financial Achievements
The company's consolidated GAAP net income rose by 19% year-over-year to $22.5 million, while the non-GAAP consolidated adjusted EBITDA increased by 33% to $64.9 million. These achievements underscore CarGurus Inc's ability to leverage its cost base and drive operating efficiencies, crucial for maintaining competitiveness in the Vehicles & Parts industry.
Key Financial Metrics
CarGurus Inc reported a gross profit of $182.6 million, with a margin of 79%, up by 403 basis points from the previous year. Operating expenses increased by 10% to $155.1 million, reflecting investments in sales, marketing, and technology. The company's cash, cash equivalents, and short-term investments stood at $246.7 million, a 21% decrease from the end of 2023, indicating a strategic allocation of resources.
We are proud of our third quarter results as our Marketplace revenue growth further accelerated, and we leveraged our cost base to drive operating efficiencies," said Jason Trevisan, Chief Executive Officer at CarGurus.
Income Statement Highlights
| Metric | Q3 2024 | Variance YoY |
|---|---|---|
| Total Revenue | $231.4 million | 5% |
| Marketplace Revenue | $204 million | 15% |
| Wholesale Revenue | $12.1 million | -44% |
| Product Revenue | $15.2 million | -23% |
| Gross Profit | $182.6 million | 11% |
| GAAP Net Income | $22.5 million | 19% |
Analysis and Outlook
CarGurus Inc's robust performance in the Marketplace segment highlights its strategic focus on enhancing dealer partnerships and consumer engagement. However, the decline in Digital Wholesale revenue indicates potential challenges in adapting to market dynamics. The company's authorization of a $200 million share repurchase program for fiscal year 2025 reflects confidence in its long-term growth prospects.
Looking ahead, CarGurus Inc's guidance for the fourth quarter of 2024 projects total revenue between $219 million and $239 million, with non-GAAP EPS expected to range from $0.50 to $0.55. The company's strategic initiatives and focus on operational efficiencies will be critical in navigating industry challenges and sustaining growth.
Explore the complete 8-K earnings release (here) from CarGurus Inc for further details.
