CarGurus, Inc. (CARG) Q2 2025 Earnings Summary

Executive Summary

Q2 2025 delivered a clean beat on revenue and non‑GAAP EPS: revenue $234.0M vs Wall Street $232.7M*, and non‑GAAP diluted EPS $0.57 vs $0.546*, with adjusted EBITDA rising 39% YoY to $77.3M and margin expanding 760 bps to 33% .
Marketplace strength persisted (revenue +14% YoY to $222.0M) while Wholesale/Product declined on lower transactions and strategic repositioning; management announced a wind‑down of CarOffer’s transactions business to focus on higher‑ROIC technology and analytics .
Q3 2025 guidance pivots to marketplace-only: marketplace revenue $228–$233M, marketplace adjusted EBITDA $76.5–$84.5M, and non‑GAAP EPS $0.50–$0.58, reflecting continued double‑digit growth amid planned investments .
Capital allocation: Board expanded the 2025 buyback by $150M (to $350M) and extended authorization through July 2026, reinforcing confidence and providing support to the equity story .
Stock narrative catalysts: clarity on exiting transaction facilitation (reduced volatility/impairment risk), sustained marketplace growth and margin leverage, and incremental repurchase capacity .

What Went Well and What Went Wrong

What Went Well

Marketplace momentum: “Our Marketplace business had another strong quarter, with year-over-year revenue growth of 14%” .
International outperformance: revenue up 28% YoY, UK app was the #1 most downloaded automotive app in Q2; AutoCanada named CarGurus its preferred digital retail/listings partner .
Product/insights adoption: nearly 18,500 dealers subscribed to Next Best Deal Rating; merchandising health to ~8,175 dealers (+~30% QoQ) and Max Margin to ~4,300 (+~70% QoQ), signaling deeper workflow embedding and operating leverage .

What Went Wrong

Wholesale transactions and revenue under pressure: transactions fell 55% YoY; Digital Wholesale revenue down 49% YoY, with segment operating loss of $(37.0)M (inclusive of impairments) .
Impairments and strategic reset: $32.6M total impairments in Q2 (cost of revenue $2.9M; operating expenses $29.6M) tied to CarOffer reporting unit; management decided to wind down CarOffer transactions in H2 2025 .
Macro/tariff uncertainty remains: management noted consumer demand volatility and high interest rates, keeping the backdrop uncertain and encouraging dealer focus on ROI partners .

Financial Results

Summary Financials (USD)

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($MM)	$218.7	$225.2	$234.0
Non-GAAP Diluted EPS ($)	$0.39	$0.46	$0.57
Non-GAAP Gross Profit Margin %	84%	89%	89%
Non-GAAP Adjusted EBITDA ($MM)	$55.6	$66.3	$77.3
Adjusted EBITDA Margin %	25%	29%	33%
GAAP Net Income ($MM)	$(68.7)	$39.0	$22.3
GAAP Diluted EPS ($)	$(0.66)	$0.37	$0.22

Segment Breakdown (Revenue, $MM)

Segment	Q2 2024	Q1 2025	Q2 2025
U.S. Marketplace	$180.1	$195.2	$202.7
Digital Wholesale	$23.5	$12.9	$12.0
Other	$15.1	$17.0	$19.3

KPIs

KPI	Q1 2025	Q2 2025
U.S. Paying Dealers	25,153	25,478
International Paying Dealers	7,219	7,617
Total Paying Dealers	32,372	33,095
U.S. QARSD ($)	$7,369	$7,533
International QARSD ($)	$2,073	$2,309
Consolidated QARSD ($)	$6,173	$6,349
Transactions	5,209	3,955
Avg Monthly Sessions (U.S., MM)	85.7	84.6

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Consolidated Revenue	Q2 2025	$222–$242M	Discontinued (pivot to marketplace-only guidance)	Discontinued consolidated guidance
Marketplace Revenue	Q3 2025	N/A	$228–$233M	New metric guided
Marketplace Adjusted EBITDA (Non-GAAP)	Q3 2025	N/A	$76.5–$84.5M	New metric guided
Non-GAAP EPS	Q2 2025 vs Q3 2025	$0.52–$0.58 (Q2 guide)	$0.50–$0.58 (Q3 guide)	Slightly lower midpoint sequentially
Diluted Shares Assumption	Q2 2025 vs Q3 2025	100.0M (Q2 guide)	101.0M (Q3 guide)	Higher share count
Share Repurchase Authorization	2025	$200M (effective Jan 2025)	+$150M to $350M, extended through Jul 2026	Raised/extended

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
AI/Technology initiatives	Q4: Personalized comparison pages and AI‑driven recommendations to boost engagement . Q1: Launched CG Discover (AI conversational guide) .	Integrated video reviews into CG Discover; users engaging 3x more time; research content traffic up 170x YoY; app improvements incl. Dark Mode .	Accelerating AI-led engagement .
Digital Deal adoption	Q4: Fastest-growing product; ~9,570 dealers; strong online-to-offline lead quality .	~12,000 dealers globally; 27% of dealer email leads; +60% appointments YoY; ~30% of Digital Deal leads include financing .	Strengthening penetration and intent signals .
Tariffs/Macro backdrop	Q4: Dealer hesitation around election/macro; focus on ROI platforms .	Some tariff clarity but uncertainty persists; high rates and elevated used prices; dealers consolidating spend to high‑yield marketplaces .	Persistent uncertainty; ROI focus .
International	Q4: Revenue +26% YoY; expanding dealer base and CARSD .	Revenue +28% YoY; UK #1 app download rank; AutoCanada partnership; net dealer adds in both regions .	Strengthening execution and scale .
Sourcing strategy	Q4: Rebuild CarOffer; improve ops and product‑market fit .	Wind down CarOffer transactions; retain AI inventory intelligence and Top Dealer Offers consumer sourcing; focus on tech/analytics vs facilitation .	Strategic pivot to scalable, higher‑ROIC capabilities .
Marketing/Brand	Q4: Channel shift to TV/online video; brand campaign “Big Deal” .	Continued investments in sales/marketing and product to drive durable growth; expects annual margin expansion .	Continued investment with margin discipline .

Management Commentary

“Accordingly, we have made the decision to wind down the CarOffer transactions business over the balance of the year… we will focus on technology and analytics that enable smarter sourcing and pricing decisions rather than facilitating the transactions themselves” — Jason Trevisan, CEO .
“We plan to concentrate our future sourcing offerings in two key areas… AI‑powered inventory intelligence through our sourcing insights platform… [and] enable consumer vehicle sourcing at scale through Top Dealer Offers” — Jason Trevisan .
“We ended the second quarter above forecasted guidance range for total revenue and adjusted EBITDA. Marketplace performance was a key contributor.” — Jason Trevisan .
“Daily active users [of the dealer app] up 71% YoY, illustrating the CarGurus app’s role as a go‑to workflow tool.” — Jason Trevisan .
“We still expect annualized margin expansion in 2025 relative to 2024.” — Jason Trevisan .

Q&A Highlights

Dealer growth and wallet opportunity: runway across core listings and add‑on products; >50% runway across most cross‑sell products; strong engagement with Dealer Data Insights fostering retention .
Macro/tariffs: modest anxiety easing but uncertainty persists; high rates and elevated used prices; dealers consolidating spend to ROI platforms; CarGurus well‑positioned as a market leader .
Wind‑down costs: total charges $14–$19M; ~$5–$7M restructuring, ~$8–$10M wind‑down operations, ~$1–$2M non‑cash; ~$1M quarterly recurring expenses absorbed by Marketplace .
Competitive landscape: respect for Amazon but strong moats in selection, data, and trusted dealer relationships; early feedback points to low volume so far on new initiatives .
AI/agentic search: CG Discover is conversational and reasoned; deep adoption planned across audience acquisition and on‑site experiences; auto buying retains a human layer difficult to replicate in horizontal agents .

Estimates Context

Results vs Wall Street consensus (S&P Global):

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($MM)	$218.7 actual vs $215.7 estimate*	$225.2 actual vs $226.6 estimate*	$234.0 actual vs $232.7 estimate*
Primary EPS (Non-GAAP) ($)	$0.39 actual vs $0.335*	$0.46 actual vs $0.436*	$0.57 actual vs $0.546*
EBITDA ($MM)	$55.6 adj. EBITDA vs $52.5 estimate*	$66.3 adj. EBITDA vs $63.6 estimate*	$77.3 adj. EBITDA vs $75.3 estimate*

Notes: Values marked with * are consensus estimates retrieved from S&P Global. Methodology differences may exist between S&P “EBITDA” and company’s Non‑GAAP Adjusted EBITDA.*

Highlights:

Q2 2025: revenue and EPS both beat consensus; adjusted EBITDA above the S&P EBITDA consensus mean, acknowledging methodology differences .
Q1 2025: EPS beat, revenue slightly below consensus; Q2 2024: both revenue and EPS exceeded estimates.*

Key Takeaways for Investors

The decision to exit transaction facilitation (CarOffer) reduces earnings volatility, curtails impairments, and redirects capital to scalable, high‑margin marketplace, analytics, and consumer sourcing capabilities .
Marketplace remains the core compounding engine: double‑digit growth with strong operating leverage; guidance points to continued double‑digit revenue growth and robust EBITDA in Q3 .
Product-led engagement is expanding: Dealer Data Insights and Digital Deal adoption support higher CARSD and retention, strengthening wallet share and pricing power over time .
International is becoming a more material contributor with superior growth and engagement metrics (UK app rank, AutoCanada partnership), offering multi‑year share gains .
AI differentiation: CG Discover and on‑site personalization deepen consumer engagement and improve lead quality; dealer app usage up 71% YoY embeds CarGurus into daily workflows .
Capital returns add support: authorization lifted to $350M and extended to July 2026, signaling confidence and providing a buyback backstop amid strategic transition .
Watch macro (tariffs, rates, used price dynamics): management’s ROI focus and dealer consolidation to high‑yield platforms underpin resilience, but near‑term demand/mix can swing execution intensity .

Additional Press Releases (Q2 context)

AI‑powered search experience launched June 9, 2025, enabling conversational discovery and personalized comparisons, reinforcing AI leadership and engagement advantages on‑site .
Earnings release notice (July 21) and Top Dealer Awards (Aug 6) support brand and dealer ecosystem momentum (Q3 timing reference from document list).

Appendix: Detailed Q3 2025 Guidance (from Q2 release)

Marketplace revenue: $228–$233M .
Non‑GAAP Marketplace Adjusted EBITDA: $76.5–$84.5M .
Non‑GAAP EPS: $0.50–$0.58; diluted weighted‑average shares ~101.0M .

Source Documents

Q2 2025 Form 8‑K and press release: results, KPIs, segments, wind‑down, guidance, buyback .
Q2 2025 earnings call transcript: performance, strategy, Q&A .
Q1 2025 Form 8‑K press release: trends, KPIs, prior guidance .
Q4 2024 earnings call transcript: prior themes, international, marketing .
AI‑powered search press release (June 9, 2025): product innovation context .

Notes: Consensus values marked with * are retrieved from S&P Global via GetEstimates.