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Date

Thursday, May 7, 2026 at 5 p.m. ET

Call participants

  • Chief Executive Officer — Jason M. Trevisan
  • President and Chief Operating Officer — Sam Zales

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Takeaways

  • Total revenue -- $244 million, up 15% year over year, with international revenue growth at 39%.
  • Non-GAAP adjusted EBITDA -- $80 million, increasing 17% year over year, with a 33% margin.
  • Non-GAAP gross margin -- 92%, declining by 80 basis points from the prior year.
  • Non-GAAP net income per diluted share -- $0.58, up 21% year over year.
  • Share repurchases -- $175 million deployed under the $250 million 2026 authorization, with $75 million remaining as of quarter end.
  • Dealer metrics -- 963 net new paying U.S. dealers added year over year, with U.S. CarSID up 9%.
  • PriceVantage adoption -- Several hundred paying dealers since launch; top users saw a 117% improvement in turn time and a 47% median increase in daily vehicle detail page views.
  • Shopper Signals launch -- Feature introduced in April, with engagement from over 8,000 dealers since launch.
  • International performance -- Revenue in UK and Canada driven by favorable currency effects and UK advertising outperformance.
  • AI impact -- AI-driven tools contributed to a 20% year-over-year productivity lift in engineering; AI-powered content creation drove a roughly 30% increase in unpaid leads.
  • Productivity metrics -- Quarter over quarter a 50% productivity lift among previous AI laggards in engineering.
  • Discover tool metrics -- Leads generated from Discover grew 52% quarter over quarter; user base continues to increase sequentially.
  • Dealership Mode outcomes -- Daily lot visits grew 67% sequentially from Q4; highlighted as an app download driver and on-lot engagement enhancement.
  • Outlook for Q2 -- Revenue guidance of $247–$252 million, representing 11%–14% growth; adjusted EBITDA outlook of $77.5–$85.5 million; EPS guidance of $0.57–$0.64 on 91 million diluted shares outstanding.
  • Full-year 2026 guidance -- Revenue expected to grow 10%–13%; non-GAAP adjusted EBITDA margin expected to compress by 1.5–2.5 percentage points from 2025.

Summary

CarGurus (CARG +2.00%) delivered double-digit revenue and adjusted EBITDA growth driven by premium product adoption, international momentum, and embedded AI capabilities, while management reiterated disciplined capital deployment and sustained product innovation. The quarter revealed expanded data-driven analytics for both dealers and consumers, marked by significant AI-fueled productivity advances across the engineering and sales organizations. Guidance reflects continued year over year topline expansion with near-term margin pressure attributed to investment in product, technology, and marketing.

  • Management clarified that first-quarter margin favorability was primarily due to a retroactive change in Canadian tax law rather than a structural cost reduction.
  • U.S. and international visitor sessions, monthly uniques, and in-app engagement all rose year over year and sequentially, countering concerns of potential Q1 demand weakness.
  • Adoption of new dealer products—including inventory pricing and conversion tools—was the largest driver of CarSID sequential growth, with modest contribution from price increases and higher-quality leads.
  • Innovation such as integrating CarGurus inventory into ChatGPT positioned the company as the first U.S. automotive marketplace to offer live local vehicles inside an AI-native platform.
  • Share repurchase strategy remains opportunistic, with management highlighting no fixed minimum cash threshold and a flexible approach leveraging a line of credit as needed.

Industry glossary

  • CarSID: The count of unique, paying dealer subscriptions (dealer customers) registered on the CarGurus platform.
  • VDP (Vehicle Detail Page): An individual web page displaying comprehensive information and data for a specific vehicle listing on CarGurus.
  • Discover: CarGurus' generative-AI-powered, onsite conversational vehicle discovery and search tool.
  • Dealership Mode: App feature that surfaces pricing, deal ratings, and AI-powered vehicle comparisons in real time when a user visits a participating dealership.
  • Shopper Signals: A dealer-facing AI feature aggregating shopper activity and preferences across CarGurus to enable enhanced lead qualification and engagement.
  • PriceVantage: A VIN-level, AI-driven vehicle pricing and inventory management software solution offered à la carte to dealers for profit optimization.

Full Conference Call Transcript

Jason M. Trevisan: Good afternoon, and thank you for joining us. We delivered strong financial results in the first quarter, with 15% year-over-year revenue growth to $244 million and adjusted EBITDA up 17% year over year with a margin of 33% as our product investments helped drive sustained growth while maintaining healthy profitability. This performance was driven by premium tier adoption, greater usage of our AI-powered products, lead growth, and net dealer additions. That strength was especially evident internationally in our UK and Canada markets, where revenue grew 39% year over year, reinforcing our ROI advantage and driving share gains in both markets. At the foundation of our product innovation and increasing customer engagement is the data layer of our marketplace.

We ingest roughly half a billion first-party consumer shopping signals each day across demand, pricing, inventory, and engagement. Today, we apply these proprietary marketplace signals in our AI-enabled analytics platform to build products that enable dealers to make better-informed decisions and help consumers shop with more confidence and achieve better outcomes. That work shows up in our 2026 strategy through three value creation drivers. First, we are expanding CarGurus, Inc. offerings into integral parts of the dealer workflow, connecting inventory, marketing, lead conversion, and data pillars through mutually reinforcing products. Second, we have begun transforming car shopping into a trusted AI-led journey from research to consideration and purchase, giving consumers greater confidence and more benefits from using CarGurus, Inc.

And third, we are disciplined in our capital deployment with the aim of growing long-term earnings power and stockholder value. I will now walk through our first quarter progress across each of these drivers. Driver one, expanding CarGurus, Inc. offerings into integral parts of the dealer workflow, connecting inventory, marketing, lead conversion, and data pillars to mutually reinforcing products. Our marketplace has long helped dealers market inventory and generate high-quality customers from our largest and most engaged car shopping audience, and dealers rank CarGurus, Inc. number one in ROI among listing sites, which was recently reaffirmed in a survey of a select group of dealers.

We are building on that marketing foundation by expanding across additional key dealer pillars—inventory, lead conversion, and data—and have begun embedding predictive intelligence more directly into those dealer workflows to support better-informed decisions. That is showing up in greater wallet share gains and higher engagement as dealers use CarGurus, Inc. for more of their day-to-day work. In our inventory pillar, we are focused on helping dealers make better decisions about which vehicles to stock and how to price them to optimize their margin and turn-time goals. PriceVantage, our first specialized software solution sold à la carte, has already reached several hundred paying dealers since its October launch.

It uses our first-party demand signals, market data, and machine learning to generate VIN-level pricing recommendations aligned to dealer objectives. Our top engaged dealers using PriceVantage saw a 117% improvement in turn time relative to their top five competitors on CarGurus, Inc., and a 47% median increase in daily VDP views, as they adjusted pricing faster and with greater precision in response to live market conditions. We are also making our data available wherever dealers make daily inventory decisions. Our browser extension gives paying customers access to CarGurus, Inc. pricing directly within inventory management systems and auction sites, putting our data in the dealer’s workflow at the point of action.

The aim is to make CarGurus, Inc. intelligence a more embedded input in how dealers source and price vehicles. Usage of the extension tripled quarter over quarter, demonstrating that more daily inventory decisions are happening with CarGurus, Inc. data in the loop. In the conversion pillar—focused on how dealers turn interest into sales—in April, we launched Shopper Signals in our premium tiers. Shopper Signals brings together first-party shopper behavior across CarGurus, Inc., including browsing activity, vehicle preferences, dealer engagement, and digital deal actions. Leveraging AI, Shopper Signals gives dealers a richer view of each shopper’s intent, preferences, and activity so they can take a more customer-centric approach to follow-up.

That can include prioritizing high-intent leads, understanding which vehicles best match a shopper’s needs, and suggesting similar inventory when the original vehicle is no longer the best fit or available. Driven by our leading inventory and consumer demand data, we are able to help dealers better prioritize and personalize their engagements with buyers, improving lead conversion and driving better ROI for dealers. This value is already resonating with our dealer base, with over 8 thousand dealers engaging with the feature since its mid-April launch. In our data pillar, we are focusing on giving dealers a clearer view of their performance relative to their competitors and the market broadly so they can make more profitable decisions.

We launched Performance Insights, a monthly report that gives paying dealers a more actionable view of marketplace performance. The report benchmarks dealers on leads and VDP views per vehicle, as well as average turn time relative to comparable dealers in their area, then pairs those benchmarks with VIN-level recommendations to help dealers improve merchandising, optimize inventory mix, price more intelligently, and drive stronger performance. Dealers receiving Performance Insights had a 76% open rate and made an average 59% more price updates than the period prior.

By providing data that contextualizes a dealer’s performance, predicts the outcomes of recommended actions, and allows dealers to see the results in our marketplace, we believe we are gaining reliance on our data and engagement with our platform. Leveraging our marketplace is the foundation of our dealer value proposition. We are expanding our platform by embedding intelligence more directly into the day-to-day decisions dealers make across these four pillars. That has shown up in stronger dealer engagement with our platform, growth in products per dealer, and U.S. CarSID up 9% year over year.

Driver number two, transforming car shopping into a trusted AI-led journey from research through consideration and purchase, giving consumers greater confidence and more benefits from using CarGurus, Inc. AI is reshaping how consumers discover and research vehicles, but for the second-largest purchase most people make, we believe confidence still comes from trust in a shopping process. In Q1, we deepened our role across that full journey—engaging shoppers earlier through AI-native discovery, giving them personalized tools to evaluate options, and building more confidence at the point of purchase. That has driven stronger engagement across CarGurus, Inc., with monthly uniques, sessions, time spent, and steps taken on the platform all growing year over year.

Our app reflects that momentum as well: it remained our fastest-growing traffic source, and we are number one in the auto category in active users and time spent. We categorize the consumer journey into three stages: research, consideration, and purchase. In research, shoppers often start broad before narrowing to a model and then a specific vehicle. A very small but growing percentage of shopping journeys now begin in AI-native environments, and we want CarGurus, Inc. inventory and data to be present where that discovery starts. In Q1, we launched the CarGurus, Inc. app inside ChatGPT, becoming the first automotive marketplace in the U.S. to integrate live local inventory directly into the platform.

When shoppers express purchase intent in ChatGPT, they can see local vehicles, vehicle details, and deal ratings without leaving the conversation, then move directly to CarGurus, Inc. to contact the dealer or submit a lead. While AI-driven search traffic remains small, it is growing quickly, and CarGurus, Inc. has shown up well in that traffic because shoppers can access broad inventory, rich vehicle data, and trusted deal ratings directly at the point of discovery. That matters because conversion from this traffic remains meaningfully higher than traditional channels. We also continue to evolve our on-site generative AI search experience, Discover, from a research feature into a more effective shopping guide.

We added new car inventory, improved relevance using shopper profile data, and made it easier for shoppers to move from conversation to specific vehicles and dealer contact all within the experience. That helped move shoppers from exploration to evaluating real inventory and connecting with dealers more quickly, while generating richer demand signals across our platform. Discover users continue to grow quarter over quarter, and more notably, leads grew 52% quarter over quarter. In consideration, shoppers are deciding whether a specific vehicle fits their needs and budget, comparing options, and understanding the trade-in value for their current car.

We advanced Sell My Car, introducing a conversational AI flow that makes it easier for consumers to get valuations and offers with less friction. Sell My Car continued to gain traction in the U.S., improving the selling experience for consumers and giving dealers efficient access to source inventory. In the first quarter, we launched Sell My Car in Canada, where early engagement and adoption are off to a strong start. In the purchase step, we are focused on the moment when a shopper is physically on the lot and making a final decision. Dealership Mode is built for that moment.

When a CarGurus, Inc. app user arrives at a participating dealer, the app brings pricing, deal ratings, payment estimates, and AI-powered vehicle comparisons directly into the in-store experience. Recently, we began rolling out capabilities that give dealers more visibility into verified on-lot activity. Those signals are more predictive of purchase intent than a traditional lead and help us close the loop between online activity and in-store outcomes. Since Q4, daily lot visits have grown 67%. We believe Dealership Mode has also become a leading driver of app downloads, expanding our owned audience at the point of purchase and strengthening the connection between shopper engagement and dealer value.

Across research, consideration, and purchase, we are using AI and first-party signals to make CarGurus, Inc. more relevant, effective, and personalized across the consumer journey. As consumers engage with us across more steps, we have more opportunities to help them move from research to action while improving the signals we translate into dealer value. We believe that is driving more leads and more down-funnel shoppers while giving consumers clear information and greater trust in the outcome. Driver number three, disciplined capital deployment with the aim of growing long-term earnings power and stockholder value. We generated strong free cash flow, and that cash generation fuels our capital allocation strategy.

We will continue investing internally where we see the strongest long-term returns, preserving flexibility for targeted M&A, and returning capital to stockholders. 2026 is an investment year by design, with increased product, technology, and development spend, including AI-driven innovation, as well as higher sales and marketing investment to support the introduction and adoption of new dealer products and growing our consumer brand and audience. We expect these investments to modestly weigh on margins in the near term, but we believe they will drive more durable long-term growth and a healthy margin profile. In the first quarter, those investments funded the launches and expansions I described earlier across our dealer pillars and consumer journey.

They also funded the infrastructure and internal capabilities needed to launch more products and features faster, as well as the security, governance, standardized systems, and dedicated teams required to scale AI responsibly across the business. Today, a majority of employees use AI in their daily workflow, and in Q1, we standardized AI systems across engineering and product, and established a dedicated AI solutions team to identify, prioritize, and transform high-value workflows with measurable ROI. We measure engineering productivity using a mix of internal metrics and external benchmarks. Those indicators show that AI solutions have contributed to a 20% year-over-year productivity lift and a 50% lift quarter over quarter among AI laggards, expanding our overall product development capacity.

Beyond engineering, AI-powered content creation helped drive a roughly 30% increase in unpaid leads year over year, and AI has also helped our sales team spend more time with customers, reach more dealers, and better educate and engage them on how our solutions can help them make better-informed decisions. These investments are improving speed, capacity, and execution across the platform as we move from AI-assisted workflows toward agentic AI capabilities that we believe will support more complex, end-to-end work in the future. We have applied the same discipline to capital returns. Since 2022, we have repurchased approximately $896 million worth of shares, or about 29% of our shares outstanding, while continuing to grow revenues and profitability.

In 2026, our Board authorized a new $250 million share repurchase program through year end, and in the first quarter, we deployed approximately $175 million under that authorization. We will continue to repurchase shares when we believe it is an attractive investment after funding product and technology investment and maintaining balance sheet strength. We are allocating capital with discipline toward product, technology, and AI-driven innovation while continuing to return capital to stockholders. We believe this approach will expand our capacity to innovate, strengthen profitability, increase cash generation, and create long-term stockholder value. Q1 showed progress across our dealer and consumer value creation drivers.

On the dealer side, we expanded further into the dealer workflow across inventory, marketing, lead conversion, and data. On the consumer side, we extended our role across more of the shopping journey, from AI-native research through purchase. What connects these efforts is the intelligence layer of our marketplace. The real-time demand, pricing, inventory, and engagement signals across CarGurus, Inc. help us build better products for dealers and better experiences for consumers. Over time, we expect this to increase dealer reliance on our platform, grow our share of dealer wallet, and deepen consumer engagement across the journey.

We are supporting that strategy with disciplined capital allocation, investing in the product, technology, and AI-driven innovation we believe can drive the strongest long-term return, while continuing to return capital to stockholders. Now let me walk through our financial results, followed by our guidance for the second quarter and full year 2026. First quarter revenue grew 15% year over year to $244 million, above the midpoint of our guidance range, driven by strength from our strong year-end 2025 bookings as well as continued momentum in our international business, with slight moderation in OEM advertising reflecting the typical first quarter step down. In the first quarter, U.S.

CarSID grew 9% year over year, and we added 963 paying U.S. dealers year over year. We continue to increase our dealer base while taking greater wallet share, driven primarily by upgrades and broader adoption of add-on products, with modest contribution from like-for-like price increases and higher lead quantity and quality. For the second quarter in a row, new product adoption was the largest driver of the sequential increase in CarSID. Our international business outperformed in the first quarter, with revenue up 39% year over year, driven by favorable FX and overperformance in UK advertising revenue. I will now discuss our profitability and expenses on a non-GAAP basis.

First quarter non-GAAP gross profit grew 14% year over year to $225 million. First quarter non-GAAP gross margin was 92%, down about 80 basis points year over year. First quarter non-GAAP adjusted EBITDA grew 17% year over year to $80 million, above the high end of our guidance range, and adjusted EBITDA margin was 33%, up about 60 basis points year over year, due in part to a favorable item related to a retroactive change in Canadian tax law. First quarter non-GAAP operating expenses totaled $152 million, up 13% year over year, reflecting higher sales and marketing expense and higher product, technology, and development expense versus prior year, as we invest to continue the accelerated pace of AI product introductions.

First quarter non-GAAP net income per diluted share attributable to common stockholders was $0.58, up 21% year over year. We ended the quarter with $72 million in cash and cash equivalents, a decrease of $118 million from the end of the fourth quarter, primarily driven by $175 million in share repurchases in the quarter, partly offset by adjusted EBITDA. As of the end of Q1, we have $75 million remaining on our 2026 authorization. I will now turn to our guidance for the second quarter and full year 2026. We expect our second quarter revenue to be in the range of $247 million to $252 million, up between 11% and 14% year over year, respectively.

For the second quarter, we expect our non-GAAP adjusted EBITDA to be in the range of $77.5 million to $85.5 million. We expect second quarter non-GAAP earnings per share to be in the range of $0.57 to $0.64 and diluted weighted average common shares outstanding to be approximately 91 million. Turning to the full year, we are reiterating that we expect 2026 revenue to grow in the range of 10% to 13% year over year. We still expect full-year non-GAAP adjusted EBITDA margins to compress approximately 1.5 to 2.5 percentage points in 2026 relative to 2025. We will now open the call for questions.

Operator: Thank you. We will now be conducting the question-and-answer session. We ask that you please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 on your telephone keypad. You may press star 2 if you would like to remove your question from the queue. One moment please while we poll for questions. Our first question is from Christopher Alan Pierce with Needham. Please proceed with your question.

Christopher Alan Pierce: Hey, good afternoon, everyone. If I look at the midpoint of the guide versus where things landed, I would love to get some color around whether it was planned spending on product development that was pushed out, or spending coming in less than you expected on that line item because of the AI tools you are talking about. Big picture, margins came in a lot better than I think we were all expecting, so I want to get a sense of how we should think about it going forward and the full-year guide you still have intact?

Jason M. Trevisan: Thanks very much, Chris. It is Jason. Thanks for the question. We called out one thing in particular, which is the retroactive change in Canadian tax law. There were a couple other timing items, or smaller one-time items, that, if you were to aggregate all of those, would have put us closer to the midpoint. As a result, I would say no structural changes or surprises, which leads us to having reiterated our guide. Timing of spend could be marketing and brand as an example, and midpoint is where we aim.

Christopher Alan Pierce: Okay, perfect. Thank you. And then just on the new tools, you are talking about premium tier adoption. It seems like these are mostly data-related tools. Are dealers still holding off on digital deal? They do not want to go full Carvana mode; they want to get the customer in the room for the loan side. That seems underutilized—maybe that is the right term. I would love to hear how you are winning so much on data, but dealers are still afraid to rip the band-aid off on full digital.

Sam Zales: Hey, thanks, Chris. The Digital Deal continues to grow in the quarter. We did not put any specific metrics on it, but it continues to be a very important tool for more than half of our customers, so we are really proud of what that product has done. Reminder that consumers are still saying, “I want to do much of the purchase process online, but then I would like to still go to the store.” The huge majority are still saying they want to touch and feel the product in the store, so only a few percentage points in the market are still buying fully online. We are still gaining more adoption in Digital Deal.

When we think about it, we think about high value in our digital process. A consumer might put trade-in information in, share information on budget, and possibly get financing as part of that. You heard about the launch of Shopper Signals in April, which has taken off dramatically with our customers, with 8 thousand customers using it now, either in real time or integrated to the CRM. We are providing that information as well. Through multiple products, we are helping dealers engage with high-value actions that bring the consumer further down the funnel and more ready to buy, and that is why we are achieving the ROI number one status according to dealers in the market.

It is still growing, it is still a big part of our business, but dealers know the consumer still wants to be in store, and that is why we are building multiple ways for dealers to interact with that high-value action.

Operator: Our next question is from Rajat Gupta with JPMorgan. Please proceed with your question.

Rajat Gupta: Great, thanks for taking the question. You mentioned in your prepared remarks moving from AI-assisted workflows towards agentic AI capabilities. Was that a comment around just your own internal product development and engineering, or was that a comment on helping customers move in that direction? Just want to clarify that. And I have a follow-up. Thanks.

Jason M. Trevisan: Hey, it is Jason. The comment was about internally, and it is both in engineering and product, as well as outside for workflow purposes. You can assume that the same evolution is happening with our products already.

Rajat Gupta: Got it. Are there one or two use cases around agentic AI from a customer standpoint in your pipeline—dealer operations, consumer support, pricing workflows—any hint you can give us there?

Jason M. Trevisan: I think the best examples of AI in our products right now are with pricing and inventory, where we are reading the market in real time, making real-time recommendations to dealers, and then using that to predict—and hold ourselves accountable to those predictions—the implications of those changes. In terms of AI versus agentic AI, that is on the margin. Beyond that, it is a broad-based evolution from AI to agentic AI that is going to manifest in a variety of ways, and we will give more detail as there are more pronounced and obvious examples at the customer level.

Rajat Gupta: A quick one around the UK. We read some reports around potential dealer or customer churn at one of the larger players in that market. Did that in any way benefit your share growth in the region, or was that an opportunity to engage with customers more?

Sam Zales: Thanks, Rajat. I would say our general success in both the UK and Canada continues on a very aggressive and successful path. You saw the numbers in terms of growth in both dealer adds and CarSID. There was probably a positive impact—we heard about it too. I am connected into that market very deeply with our team in Europe. I think Trader did stub its toe a little bit, but that did not have a massive effect on our business. We are following our playbook from the U.S. We are listed as the ROI number one in that market, and we have been for a long time with those dealers.

They compare us to the big market leader there—who is charging a lot more—and see we produce more ROI. So they want to test and use our product, and that is why we are gaining new customers and building CarSID, because we are also building new products in those markets and following the playbook from the U.S. Our visitor base is growing faster than our competitors. We are making the investments to deliver a better product for our customers that delivers better returns. I would not put too much emphasis on the incident or communication in the marketplace from November. We are continuing to seek to outperform, and that is our push.

Operator: Our next question is from Andrew M. Boone with Citizens. Please proceed with your question.

Andrew M. Boone: Thanks so much for taking the questions. A big-picture question in terms of data. It seems like Dealership Mode and Discover are both data plays. Can you speak to new ways you are trying to interact with consumers and the additional amount of information you are gaining from more AI-type interfaces, and how you think about deeper integration with customers and what that unlocks for you? And then secondly, if I look at traffic for the quarter, maybe it was down in the U.S.—maybe that is weather. Can you speak to the weather impact and what you saw in 1Q and how that ran through the model? Thanks so much.

Jason M. Trevisan: Thanks, Andrew. Data is certainly a key enabler for us, but it is not just data; it is what we do with the data that allows us to create products that we believe are unique in the market. From a consumer journey perspective, historically we have been very good once a consumer knows which car they want. Discover was our first example that helped upstream—helping consumers determine which type of car would be good for them—and it is growing its use cases rapidly and improving a lot. As it has expanded, it not only helps them upstream but also helps them navigate the consideration phase and then connect with the dealer.

Dealership Mode, once they have connected with the dealer, helps them understand the full totality of information around that vehicle and dealer that they would benefit from in buying the car. In doing that, we learn an extraordinary amount about our customers. In a conversational exchange, they will share a lot of information because the more information they share, the better and more informed the response will be. We take that and help them not only through empowering them, but also through guidance and recommendations—helping them find a better car, a better match. When they are in Dealership Mode, we understand that dealer well.

We understand inventory, pricing, demand trends, merchandising, car comparisons, and financing—things we would argue we know better than anyone because we have the most retail data. That can be overwhelming for consumers, so we distill it down. We try to be their companion throughout. Our AI tools have memory and personalization, and they travel with the consumer. We think it is changing the game from a filter-based, drop-down, episodic hunting-and-pecking into a guided tour that answers questions and helps them get to the best answer.

Sam Zales: On your second question, if I got it correctly, we saw visitor statistics rise year over year, so we did not see a negative impact on our global business or in the U.S. It continued to grow. You are right there were storms that impacted dealers’ ability to sell a vehicle and have foot traffic during that period of time. There is a lot going on in our market today—gas prices, consumer sentiment, and inventory acquisition challenges. But in both uniques and sessions for us, we were up year over year and quarter over quarter. We believe that is a sign of the strength of our offering in the marketplace. Does that answer your question?

Andrew M. Boone: Yep, that is great. Thank you.

Operator: Our next question is from Marvin Milton Fong with BTIG. Please proceed with your question.

Marvin Milton Fong: Good evening. Thanks for taking my question. I would love to dig in more on PriceVantage. Appreciate the update on the number of paying dealers. Can you give more color on the type of dealers signing up—franchise versus independent—and whether these are competitive displacements of an incumbent solution or the first time they are using a sophisticated inventory management system?

Sam Zales: Hey, Marvin. Thanks. We are really proud of the growth of the PriceVantage product. Here is why it is so different than anything else in the marketplace: it is a profit maximization predictive tool. Many others are risk mitigation tools that look back at book prices to stem losses. We are helping dealers find a forward-looking view with our consumer demand data—what price to acquire a vehicle for and what price to retail it at to maximize profitability. It is truly a differentiator. We are selling to both independent and franchise dealers and have seen success in both segments. Two outcomes stand out. First, turn times—how to improve them.

You saw the 47% increase in VDP views and 117% faster sale versus their top competition. Second, gross profit per unit—finding the right balance between pricing and selling vehicles to drive profit. In some cases, we are selling to customers who never had a pricing tool. In many cases, we complement an existing tool but do something different, with predictability driven by consumer demand. The Chrome extension is key: even if you have a tool today, adding the CarGurus, Inc. PriceVantage Chrome extension gives a different view of pricing and predictability with consumer demand. It helps dealers say, “I might want to switch because this gives me something totally different.” Usage tripled quarter over quarter.

We will continue to push this product to change how dealers solve their number one problem: how to acquire inventory at the right price and sell it at the right price.

Marvin Milton Fong: Got it. And a follow-up on buybacks. You have done a great job returning capital to shareholders. I believe you only have $75 million left in the remaining authorization, and you clearly bought a season in the first quarter. How should we think about the path going forward—is the plan to exhaust the remaining authorization over the balance of the year, or do you have an appetite to reload with more authorization?

Jason M. Trevisan: We have that plan in place, and we put plans in place that we hope we can use. At the same time, we do not have an indiscriminate approach. When we think it is a good investment, we will get aggressive. We have never hinted at what we might do in the future in terms of expanding or introducing a new program. What we have shared is the $250 million authorization and that we deployed $175 million in Q1, leaving $75 million. That $75 million will adhere to the same philosophy: at prices we think are more compelling, we will be more aggressive.

Operator: Our next question is from Joseph Robert Spak with UBS. Please proceed with your question.

Joseph Robert Spak: Thanks. Good afternoon, everyone. Maybe just to follow up on that last topic. The cash balance you finished the quarter at—if my models are right, I think that is the lowest since 2020. You generate healthy cash flow every quarter, but could you give some indication of minimum cash levels you want to operate the business at?

Jason M. Trevisan: Thanks, Joe. We clearly think about the right cash levels and minimum cash levels. We think about three categories for using cash and our cash production power: first, investing back in the business—built into our operating margin calculus; second, M&A—and having dry powder for M&A; and third, returning capital to shareholders. We are proud of our free cash flow conversion rate. From a minimum perspective, we think about cash on hand as well as cash we have ready access to. We have a line of credit that is very easily accessible, which we think is prudent. We have never shared a hard floor. With a line of credit, the hard floor becomes more fluid because you have access to more.

It also relies on timing of working capital. We can have pretty large cash swings—we control it—but if it dips down artificially because of timing, it comes back very quickly because of timing. We think about risk mitigation as a balance to being aggressive when we think shares are underpriced.

Joseph Robert Spak: Fair enough. Then, appreciate all the commentary on AI and the integrations and apps. It may be too early, but are you able to see anything about conversion rates or acquisition costs for dealers as a result of these tools, or is it just not there yet?

Jason M. Trevisan: I do not know if I can speak much to what dealers are experiencing—there would be a huge range. For us, LLMs remain a very small percent of our traffic and a very small percent of our leads. It does tend to be high-quality traffic. We show very well in the LLMs in terms of visibility and our share of traffic that comes from there, but they are very top of funnel and not a substitute for a marketplace. Whether it is us showing up in an LLM, our app in the ChatGPT app marketplace, or LLMs testing paid search—we will be front and center because we tend to be at the leading edge.

We are showing up well, but volumes are small. In any of those situations, users need to come to a site where they will go through the workflow, compare pricing and deal ratings, see vehicle history and ontology, and have trust and confidence. Data can be scraped and we provide access to some data, but that is very different than a marketplace that has inventory, contracts with dealers, normalized data, validated pricing, deduplicated listings, and real-time availability. Early adopters using LLMs are getting smarter and then coming to us to really go through the process.

That is why we are both embracing LLM presence and building our own capabilities—applying AI across our user experience and dealer workflow—so we stay ahead of the horizontal LLMs as well. Thank you.

Operator: There are no further questions at this time. I would like to turn the floor back over to Jason M. Trevisan for closing comments.

Jason M. Trevisan: Thanks very much. I would like to thank everyone who tuned in this evening, and thanks to everyone who asked great questions. As always, we show particular appreciation to our stockholders, our customers, and especially our employees for their passion and hard work that is helping us execute as well as we are today. Thank you very much, everyone. Have a great evening.

Operator: This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.