The 5 Most Interesting Analyst Questions From CarGurus's Q1 Earnings Call
CarGurus' first quarter results drew a positive market reaction, driven by the company's ongoing momentum in its core marketplace business and expanded operating margins. Management attributed the quarter's performance to strong dealer adoption, increased subscription tier upgrades, and robust growth in value-added products and OEM advertising. CEO Jason Trevisan emphasized that marketplace revenue rose due to 'dealer count growth, subscription tier upgrades, increased adoption of value-added products and services, and strong lead growth.' International markets, especially Canada and the UK, also contributed to the growth through higher traffic and dealer engagement.
Is now the time to buy CARG? Find out in our full research report (it's free).
Revenue: $225.2 million vs analyst estimates of $226.2 million (4.3% year-on-year growth, in line)
Adjusted EPS: $0.46 vs analyst estimates of $0.44 (5.5% beat)
Adjusted EBITDA: $66.3 million vs analyst estimates of $63.61 million (29.4% margin, 4.2% beat)
Revenue Guidance for Q2 CY2025 is $232 million at the midpoint, roughly in line with what analysts were expecting
Adjusted EPS guidance for Q2 CY2025 is $0.55 at the midpoint, above analyst estimates of $0.45
EBITDA guidance for Q2 CY2025 is $75.5 million at the midpoint, above analyst estimates of $65.68 million
Operating Margin: 20.3%, up from 12.2% in the same quarter last year
Paying Dealers: 32,372, up 1,197 year on year
Market Capitalization: $3.29 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Wyatt Swanson (D.A. Davidson) asked about Amazon's potential entry into used vehicle listings and its impact. CEO Jason Trevisan responded that building trust and dealer integration in used car marketplaces is complex, and CarGurus' longstanding relationships give it an advantage. He noted no impact from Amazon's new Hyundai offering.
Naved Khan (B. Riley Securities) inquired about OEM ad spending sustainability amid macro uncertainty and the trajectory for CarOffer. President Sam Zales pointed to strong current OEM demand but acknowledged OEMs are cautious due to tariffs, while CarOffer is under strategic review to improve its operational model and profitability.
Rajat Gupta (JPMorgan) asked about the revenue split between dealer count growth and revenue per dealer. Trevisan explained that both factors contributed in Q1, but rapid dealer growth can moderate revenue per dealer expansion. He also noted no significant tariff-related changes in dealer spending patterns.
Jed Kelly (Oppenheimer) questioned the rationale behind reinvesting instead of maximizing margin expansion and whether CarOffer might shift toward an auction model. Trevisan said investing behind current marketplace momentum is key for long-term leadership, while Zales said the company is exploring new models for CarOffer but aims to leverage differentiated analytics rather than replicate competitors.
No further analyst questions were presented on the call.
In the coming quarters, our team will be monitoring (1) the rate of dealer platform adoption and ongoing upgrades to subscription tiers, (2) execution of product innovation initiatives—particularly AI-driven recommendation and transaction tools, and (3) progress on the strategic review and potential transformation of the wholesale segment. Sustained international momentum and OEM advertising trends will also be important markers for CarGurus' overall execution.
CarGurus currently trades at $33.33, up from $27.95 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it's free).
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