CarGurus delivered results for Q3 that met Wall Street’s revenue and profit expectations, reflecting the company’s continued expansion of its marketplace platform and dealer network. Management credited the quarter’s performance to robust adoption of new software solutions, dealer upgrades to premium product tiers, and a growing international presence, particularly in Canada and the U.K. CEO Jason Trevisan emphasized, “Marketplace revenue and Marketplace EBITDA both finished above the midpoint of our guidance range, reflecting focused investment to drive sustainable top line growth and disciplined execution of our strategic priorities.” The company’s decision to wind down its CarOffer business allowed for a clearer focus on its core marketplace operations and contributed to improved operating margins year over year.
Is now the time to buy CARG? Find out in our full research report (it’s free for active Edge members).
CarGurus (CARG) Q3 CY2025 Highlights:
- Revenue: $238.7 million vs analyst estimates of $235 million (3.2% year-on-year growth, 1.6% beat)
- Adjusted EPS: $0.57 vs analyst estimates of $0.55 (3.7% beat)
- Adjusted EBITDA: $78.67 million vs analyst estimates of $76.39 million (33% margin, 3% beat)
- Revenue Guidance for Q4 CY2025 is $238.5 million at the midpoint, roughly in line with what analysts were expecting
- Adjusted EPS guidance for Q4 CY2025 is $0.64 at the midpoint, above analyst estimates of $0.61
- EBITDA guidance for Q4 CY2025 is $87 million at the midpoint, above analyst estimates of $84.27 million
- Operating Margin: 22.9%, up from 11.9% in the same quarter last year
- Paying Dealers: 33,673, up 1,989 year on year
- Market Capitalization: $3.40 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From CarGurus’s Q3 Earnings Call
-
Chris Pierce (Needham & Company) asked about dealer consolidation and concentration, specifically referencing the statistic that 25% of CarGurus dealers only pay for CarGurus. CEO Jason Trevisan explained that dealers are consolidating their marketplace partners, with average usage dropping from around three platforms to under two, driven by a focus on best ROI.
-
Marvin Fong (BTIG) questioned the pace and potential of international revenue per dealer growth. President Sam Zales stated that while prices remain lower to drive adoption, CarGurus is focused on building market share before leveraging pricing power, citing recent wins like AutoCanada’s switch from a competitor.
-
Vincent Kardos (Jefferies) asked about the relationship between dealer rooftop growth and average revenue per dealer. Trevisan detailed that rapid rooftop growth can temporarily dampen average revenue per dealer metrics, but retention improvements and upselling to existing customers are driving overall revenue higher.
-
Jamesmichael Sherman-Lewis (Citigroup) inquired about the impact of CG Discover’s broader rollout on user engagement. Trevisan highlighted that embedding Discover in the app led to tripled traffic and higher conversion rates, with deeper conversational insights enriching lead quality for dealers.
-
Rajat Gupta (JPMorgan) pressed on macro industry pressures and the sustainability of double-digit growth. Trevisan acknowledged elevated dealer inventory and consumer caution but emphasized CarGurus’ resilience due to its subscription model and diversified dealer base.
Catalysts in Upcoming Quarters
In the coming quarters, StockStory analysts will monitor (1) the adoption and revenue impact from new AI-driven dealer tools like PriceVantage and CG Discover, (2) the pace of international dealer additions and shifts in pricing strategies, and (3) further improvements in digital lead conversion and consumer engagement via features like Dealership Mode and Digital Deal. Continued progress on integrating AI into both consumer and dealer workflows will be a key signpost for future growth.
CarGurus currently trades at $35.83, up from $33.13 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
Our Favorite Stocks Right Now
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.