CarGurus (CARG 0.23%), a leading online automotive marketplace, reported its results for the second quarter of fiscal 2025 on August 7, 2025. The company posted GAAP revenue of $234.0 million in Q2 2025, slightly above analyst GAAP estimates of $232.7 million, and delivered non-GAAP earnings per share of $0.57, outpacing expectations. The quarter also included a pivotal announcement: CarGurus plans to wind down its CarOffer transactions business following continued underperformance, redirecting focus on its core Marketplace platform and data-driven dealer solutions. Overall, the period showed robust growth in the core business offset by losses in Digital Wholesale, with an earnings beat (GAAP revenue of $234.0 million vs. consensus estimate of $232.7 million) and expanding margins signaling momentum in key areas.
| Metric | Q2 2025 Results(ended June 30, 2025) | Q2 2025 Estimate | Q2 2024 Results(ended June 30, 2024) | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.57 | $0.54 | $0.39 | 46.2 % |
| Revenue (GAAP) | $234.0 million | $232.7 million | N/A | 7 % |
| Gross Profit (GAAP) | $204.4 million | $182.4 million | 12.1 % | |
| Non-GAAP Adjusted EBITDA | $77.3 million | $55.6 million | 39 % | |
| Free Cash Flow (Non-GAAP) | $65.3 million | $40.4 million | 61.6 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
About CarGurus and Key Business Drivers
CarGurus operates a digital automotive marketplace connecting car buyers and dealers, offering listings, data insights, and digital deal tools. The company is known for its robust user base and network of more than 33,000 paying dealers globally, serving both the U.S. and key international markets such as the U.K. and Canada. Its reach attracts a large, in-market consumer audience and drives value for dealers through higher visibility and actionable data.
Recent business efforts have prioritized technological innovation, particularly in artificial intelligence and analytics tools that improve dealer workflow and consumer experience. The Marketplace platform remains the core growth engine, with success tied closely to dealer network growth, increasing average revenue per dealer, and product rollouts that enhance both transparency and efficiency. Maintaining dealer relationships, adherence to regulatory standards, and adapting to a competitive landscape are also crucial for CarGurus’s strategy and sustainability.
Second Quarter Highlights and Segment Trends
The second quarter delivered notable results in several areas. The Marketplace business, which includes listings, advertising, and data products for auto dealers, continued to show solid momentum. Marketplace revenue (GAAP) rose 14% from the prior year, reaching $222.0 million. Operating income for the U.S. Marketplace segment increased 40% to $58.8 million, supported by a higher dealer count and growing dealer subscription revenue per account. U.S. paying dealers increased to 25,478 (up 4%), while international paying dealers climbed 10% to 7,617. The average revenue per U.S. subscribing dealer (QARSD) grew 9% to $7,533.
The user base remained engaged, with the site drawing 34.1 million average monthly unique U.S. users and 84.6 million sessions. International markets also recorded solid progress, with both dealer numbers and dealer revenue per account posting double-digit year-over-year growth. -- international QARSD jumped 19%.
By contrast, the Digital Wholesale segment, anchored by the CarOffer business, continued to struggle. Digital Wholesale revenue fell 49% year over year to $12.0 million. Transaction volumes dropped 55%, and the segment generated an operating loss of $37.0 million. These declines prompted management’s decision to wind down CarOffer’s Dealer-to-Dealer and Instant Max Cash Offer transaction products. This move will incur related costs estimated at $14.0–19.0 million, primarily in the second half of 2025, but it allows the company to focus resources on its Marketplace and analytics offerings, which have shown more sustainable growth and profitability year over year.
Gross profit (GAAP) increased 12% year-over-year, with gross margin (GAAP) rising to 87%, up nearly 4 percentage points. The improvement stemmed from the growing share of high-margin Marketplace revenue. Adjusted EBITDA, a non-GAAP measure of operating profit before interest, taxes, depreciation, and amortization, rose 39% and reflected a 33% non-GAAP adjusted EBITDA margin, up from 25% in Q2 2024. Free cash flow (non-GAAP) rose 62% year over year to $65.3 million.
CarGurus’s board authorized another $150 million for share buybacks, raising the 2025 repurchase authorization to $350 million through July 2026. At quarter-end, the company’s cash and equivalents (GAAP) stood at $231.2 million, down from the prior year. CarGurus does not currently pay a dividend.
The company is refining its product focus. While it exits transaction-facilitation, CarGurus will retain and expand its AI-powered dealer analytics and inventory intelligence offerings. These tools give dealers data-driven recommendations for pricing and stocking, helping them respond to local demand trends. Improvements in the Marketplace’s core functionality—lead generation, integrated dealer tools, and the consumer-facing app—remained a focus.
Management cited ongoing reasons for caution, including the costs and operational shifts tied to the CarOffer exit. Automotive industry tariffs and shifting consumer sentiment were mentioned as sources of uncertainty, but the company’s guidance assumes no dramatic change in dealer spending behavior tied to these factors. In the face of mounting competition from other online auto platforms, notably with attention around Amazon’s moves into the space, management emphasized CarGurus’s competitive edge in data, technology, and long-standing relationships with dealers.
Looking Ahead
For the third quarter of fiscal 2025, management projects Marketplace revenue of $228–$233 million and non-GAAP earnings per share of $0.50–$0.58. Non-GAAP Marketplace adjusted EBITDA is expected to fall between $76.5 million and $84.5 million. The company continues to expect annual margin expansion relative to 2024 but cautioned that it will reinvest in product and marketing efforts to secure market leadership, which could affect the pace of margin gains. Transition costs associated with the CarOffer wind-down are expected to be concentrated in the second half of the year, totaling $14.0–19.0 million.
Looking out over the coming quarters, investors should monitor the ongoing mix shift to higher-margin Marketplace activities, adoption of advanced AI-driven dealer analytics, and the possible impact of automotive market volatility. With the exit from Digital Wholesale transactions, CarGurus’s business profile will concentrate more heavily on Marketplace and data solutions. Margin progression, dealer growth, cash trends, and any response to industry competition will be key watch areas. CarGurus does not currently pay a dividend.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
