What happened

Shares of CarGurus (NASDAQ:CARG), which operates a well-known online automotive marketplace, gained 13.6% in Friday trading after the company released better-than-expected first-quarter earnings and revenues.

So what

The report's highlights include a 9% increase in total revenue to $171.4 million, which topped analysts' estimates for revenue of $158.9 million. Adjusted net income checked in at $39.1 million, or $0.33 per share, which also beat analysts' estimates of $0.22 per share. Those revenue gains were driven by 10% growth in the U.S. market. International revenue -- which accounts for only a small fraction of its total -- declined by 14%.

"I'm thrilled to share that CarGurus generated very strong results in the first quarter, both in our core business, and the CarOffer business," said CEO Jason Trevisan in a press release. "CarGurus has emerged from 2020 a stronger, more efficient company, with a strategy built for the future of car shopping, for both consumers and dealers."

Man looking at an online car graphic

Image source: Getty Images.

Now what

It was a solid first quarter for CarGurus, and the only knock against the results was a 6% decline in total paying dealers. The decline in total dealers was more than offset by a 7% increase in quarterly average revenue per subscribing dealer from $5,115 to $5,466. Management's focus will continue to be on fostering consumer engagement through valuable and accurate vehicle information, and using that value to increase the number of quality leads to dealerships. As more dealerships come back to CarGurus after the pandemic-related decline during 2020's first quarter, the company is poised for a strong year, and remains an intriguing investment in the automotive market.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.