Vincent Kardos

Vincent Kardos, on for John Colantoni of Jefferies, asked if the 'North Star' goal of 1,000 homes per quarter for breakeven is still relevant given the focus on asset-light services and inquired about the remaining runway for cost-cutting initiatives.

Answer

CFO Peter Knag confirmed that 1,000 transactions per quarter remains the breakeven target, but this now represents 'total real estate transactions,' including asset-light services, not just cash offers. He noted that quarterly operating expenses of $17 million will continue to decline. CEO Brian Bair added that technology enhancements from HomePro will enable smarter and faster scaling with greater efficiency.

Questioned the relevance of the previously stated 'North Star' goal of 1,000 homes per quarter for achieving breakeven, especially with the new focus on asset-light transactions, and asked about the runway for further cost-cutting initiatives.

Answer

The 'North Star' target of 1,000 transactions per quarter for breakeven is still relevant, but it now refers to total real estate transactions, including a mix of balance-sheet and asset-light deals. The bottom-line impact per transaction is similar across types. Regarding costs, quarterly OpEx is down to $17M and is expected to decrease further in Q3, with a continued focus on managing expenses and leveraging technology for efficiency as the business scales.

Vincent Kardos inquired about the new direct credit application pilot within Digital Deal, asking for early observations on lead conversion, and also asked about the potential business impact from tariffs on new cars.

Answer

Sam Zales, President and COO, explained that the 'direct credit app' pilot integrates directly with dealer financing systems, creating a more seamless process for down-funnel shoppers. He noted it's an extra step in listening to customer needs to drive transactions. Jason Trevisan, CEO, addressed tariffs, stating they could shift consumer demand from new to used cars, which may benefit CarGurus' subscription business if dealer turn times increase, but the company remains in a 'wait-and-see' mode.