What happened

Shares of online auto-sales marketplace CarGurus, Inc. (NASDAQ:CARG) were sharply higher today, following a third-quarter earnings result that exceeded Wall Street's expectations and included improved full-year revenue and profit guidance.

As of noon Eastern time on Thursday, CarGurus' stock was trading at $43.37, up about 8.5% from Wednesday's closing price.

So what

Massachusetts-based CarGurus, which went public last year, said that its "non-GAAP net income," or net income excluding stock-based compensation expenses, rose to $9.5 million from $2.2 million in the third quarter of 2017. Revenue rose to $119 million, up 43% from a year ago.

A person's hand holding a car key, with an auto dealer's lot in the background

Image source: Getty Images.

It's the kind of story we like: Business is good. CarGurus' total number of paying dealer partners rose 15% from a year ago, to 30,593; the company's average revenue per U.S. dealer rose 21%, to $13,993; and the average monthly traffic to CarGurus' website rose 49%.

Excluding stock-based compensation, CarGurus earned $0.08 per share. That handily beat the Street: Wall Street analysts surveyed by Zacks Investment Research expected earnings of $0.05 on a per-share basis, on average.

Now what

CarGurus also raised its full-year revenue and profit guidance. It now expects:

  • Revenue between $449 million and $450 million (prior guidance: $436 million to $438 million)
  • Non-GAAP operating income between $32 million and $33 million (prior guidance: $28.5 million to $30.5 million)
  • Non-GAAP earnings per share of $0.26 to $0.27 (prior guidance: $0.22 to $0.23)

John Rosevear has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.