Shares of CarGurus, Inc. (CARG -1.67%), an online platform connecting buyers and sellers of both new and used cars, declined over 13% during early Friday trading, before recovering some losses, after the company announced second-quarter results.
It was a rough second quarter for the company, as expected amid COVID-19 and its economic disruptions, but CarGurus did manage to top estimates. Revenue declined 34.7% compared to the prior year, down to $94.7 million, but that managed to top analysts' estimates of $86.6 million. Adjusted earnings per share checked in at $0.19, well ahead of analysts' estimates of $0.01 per share. "Although our industry and our business are facing unprecedented uncertainty amid the COVID-19 pandemic, CarGurus generated strong results in the second quarter that demonstrate our business's flexibility and resilience," said Langley Steinert, founder and chief executive officer of CarGurus, in a press release.
Management has done what it can to get through the disruptive impacts from COVID-19 and the work-from-home environments, among other challenges. It made the tough but necessary decision to reduce workforce by 13% and significantly reduce global advertising spending compared to the prior year, which is partly why it was able to deliver better-than-expected results during a downturn in business. The good news is that the company's website traffic per U.S. average monthly unique users was down only 8%, and the company has $176.2 million in cash and cash equivalents and no debt. It's just a matter of being prepared to accelerate growth once the world, and the automotive industry, returns to a more normal state.