CarGurus Inc (CARG) Q2 2024 Earnings Call Highlights: Navigating Revenue Challenges with ...

GuruFocus News
4 min read

In This Article:

  • Consolidated Revenue: $219 million, down 9% year-over-year.

  • Marketplace Revenue: $195 million, up 14% year-over-year.

  • International Revenue Growth: 21% year-over-year.

  • Wholesale Revenue: $13 million, down 59% year-over-year.

  • Product Revenue: $10 million, down 72% year-over-year.

  • Non-GAAP Consolidated Gross Profit: $183 million, up 8% year-over-year.

  • Non-GAAP Gross Margin: 84%, up from 71% in the prior year quarter.

  • Consolidated Adjusted EBITDA: $55.6 million, up 23% year-over-year.

  • Consolidated Adjusted EBITDA Margin: 25%, up 650 basis points year-over-year.

  • Non-GAAP Diluted Earnings Per Share: $0.41, up 41% year-over-year.

  • Cash and Cash Equivalents: $216 million, a decrease of $30 million from the previous quarter.

  • Dealer Count Increase: 255 dealers year-over-year, 177 sequentially.

  • Goodwill Impairment Charge: $127 million associated with CarOffer business.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • CarGurus Inc (NASDAQ:CARG) reported a 14% year-over-year growth in its marketplace business, marking the fifth consecutive quarter of acceleration.

  • The company's non-GAAP consolidated adjusted EBITDA grew 23% year-over-year, with a margin expansion of 650 basis points to 25%.

  • CarGurus Inc (NASDAQ:CARG) achieved the highest quarterly revenue increase since 2021, driven by growth in its global dealer base and increased adoption of add-on products.

  • The international business of CarGurus Inc (NASDAQ:CARG) grew revenue by 21% year-over-year, with strong performance in the UK and Canada.

  • The OEM advertising business delivered strong year-over-year growth as new vehicle inventory levels recovered, increasing impressions on the website.

Negative Points

  • Consolidated revenue for CarGurus Inc (NASDAQ:CARG) was down 9% year-over-year, primarily due to lower wholesale and product volumes.

  • Wholesale revenue declined by 59% year-over-year, driven by a decrease in dealer-to-dealer transaction volume.

  • Product revenue fell by 72% year-over-year, reflecting a decline in Instant Max Cash Offer revenue.

  • CarOffer's digital wholesale business faced challenges, with a non-cash goodwill impairment charge of $127 million recognized.

  • The process of rebuilding and integrating CarOffer's leadership and operations has been slower than anticipated.

Q & A Highlights

Q: Can you help us size the impact of the CDK outage on revenue and EBITDA in 2Q and 3Q, if any? And what still needs to be done with CarOffer? A: (Elisa Palazzo, CFO) We have not seen any impact from the CDK outage on billing or collections, and we don't anticipate any carryover impact for the third quarter. (Jason Trevisan, CEO) Regarding CarOffer, we are restructuring the sales organization and enhancing the product with data integration to boost customer confidence. The timeline for ramping up volume is taking longer than initially expected, but we are making progress with new leadership.

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