CarGurus Announces Second Quarter 2020 Results
Second Quarter Highlights:
- Total revenue of
$94.7 million , a decrease of (35%) year-over-year - GAAP operating income of
$8.7 million ; non-GAAP operating income of$24.7 million - GAAP net income of
$7.1 million ; non-GAAP net income of$21.3 million - Adjusted EBITDA of
$27.5 million
“Although our industry and our business are facing unprecedented uncertainty amidst the COVID-19 pandemic,
COVID-19 Business Update
The COVID-19 pandemic and its adverse effects have become widespread in locations where
(1)
| Three Months Ended | Six Months Ended | |||||||||||||||
| Marketplace Subscription Revenue: | 2020(1) | 2019 | 2020 | 2019 | ||||||||||||
| $ | 75,457 | $ | 122,352 | $ | 208,481 | $ | 237,373 | |||||||||
| International | 4,496 | 6,744 | 13,338 | 12,566 | ||||||||||||
| Total | $ | 79,953 | $ | 129,096 | $ | 221,819 | $ | 249,939 | ||||||||
| (1) For the three months ended |
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While the macro-economic environment makes it difficult to anticipate the many variables that are impacting the economy, the industry and CarGurus’ business, recent events are encouraging. Despite reduced consumer marketing spend in May and June, during this period CarGurus’
(2) Includes users from the Autolist website
(3) Includes sessions from the Autolist website
KPI Update
| At |
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At |
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| Number of Paying Dealers | 2019 | 2019 | 2020 | 2020 | |||||||||||||
| 26,163 | 26,289 | 25,723 | (1) | 23,806 | (1) | ||||||||||||
| International | 6,923 | 7,329 | 7,537 | 6,452 | |||||||||||||
| Total | 33,086 | 33,618 | 33,260 | 30,258 | |||||||||||||
| (1) Includes paying dealers from the Autolist website | |||||||||||||||||
To offer additional insight regarding the business, the table below depicts marketplace subscription revenue in both the
| Three Months Ended | ||||||||||||||||||||||||
| Marketplace Subscription Revenue: | 2019 | 2019 | 2019 | 2019 | 2020(1) | 2020(1) | ||||||||||||||||||
| $ | 115,021 | $ | 122,352 | $ | 127,806 | $ | 131,550 | $ | 133,024 | $ | 75,457 | |||||||||||||
| International | 5,822 | 6,744 | 7,736 | 9,012 | 8,842 | 4,496 | ||||||||||||||||||
| Total | $ | 120,843 | $ | 129,096 | $ | 135,542 | $ | 140,562 | $ | 141,866 | $ | 79,953 | ||||||||||||
| (1) For the three months ended |
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Finally, because of the updated paying dealer definition and the restatement of prior period paying dealer numbers,
| Three Months Ended | ||||||||||||
| Quarterly Average Revenue per Subscribing Dealer | 2019 | 2020 | 2020(1) | |||||||||
| $ | 5,016 | $ | 5,115 | $ | 3,047 | |||||||
| International | $ | 1,265 | $ | 1,190 | $ | 643 | ||||||
| Consolidated | $ | 4,215 | $ | 4,243 | $ | 2,517 | ||||||
| (1) For the three months ended |
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Revenue
- Total revenue was
$94.7 million , a decrease of (35%) compared to$145.0 million in the second quarter of 2019. - Marketplace subscription revenue was
$80.0 million , a decrease of (38%) compared to$129.1 million in the second quarter of 2019. - Advertising and other revenue was
$14.8 million , a decrease of (7%) compared to$15.9 million in the second quarter of 2019. - Total non-GAAP, pro forma revenue would have been approximately
$141.5 million which is inclusive of (i) approximately$126.7 million non-GAAP, pro forma marketplace subscription revenue, and (ii)$14.8 million of GAAP advertising and other revenue.
Operating Income
- GAAP operating income was
$8.7 million , or 9% of total revenue, compared to$3.5 million , or 2% of total revenue, in the second quarter of 2019. - GAAP operating income includes a one-time non-recurring
$4.3 million Restructuring expense, inclusive of$0.8 million of stock-based compensation expense, associated with the impact of the COVID-19 pandemic in the second quarter of 2020. - Non-GAAP operating income was
$24.7 million , or 26% of total revenue, compared to$12.7 million , or 9% of total revenue, in the second quarter of 2019.
Net Income & Adjusted EBITDA
- GAAP net income was
$7.1 million , or$0.06 per fully diluted share during the second quarter endedJune 30, 2020 , compared to$6.0 million , or$0.05 per fully diluted share during the second quarter endedJune 30, 2019 . - Non-GAAP net income was
$21.3 million , or$0.19 per fully diluted share during the second quarter endedJune 30, 2020 , compared to$11.0 million , or$0.10 per fully diluted share during the second quarter endedJune 30, 2019 . - Adjusted EBITDA, a non-GAAP metric, was
$27.5 million for the second quarter endedJune 30, 2020 compared to$14.5 million for the second quarter endedJune 30, 2019 .
Balance Sheet and Cash Flow
- As of
June 30, 2020 ,CarGurus had cash, cash equivalents, and short-term investments of$176.2 million and no debt. CarGurus generated$24.8 million in cash from operations and$22.4 million in free cash flow, a non-GAAP metric, during the second quarter of 2020, compared to having generated$16.0 million in cash from operations and$12.4 million in free cash flow during the second quarter of 2019.
Second Quarter Business Metrics
U.S. revenue was$89.7 million in the second quarter of 2020, a decrease of (34%) compared to$137.0 million in the second quarter of 2019. GAAP operating income in theU.S. was$15.3 million , an increase of 9% compared to$14.1 million in the second quarter of 2019.- International revenue was
$5.0 million in the second quarter of 2020, a decrease of (38%) compared to$8.0 million in the second quarter of 2019. GAAP operating loss in International markets was($6.6) million , a reduction in loss of 37% compared to a loss of($10.6) million in the second quarter of 2019. - Website traffic and consumer engagement metrics for the second quarter of 2020 were as follows:
U.S. average monthly unique users were 34.1 million(1), a decrease of (8%) compared to 36.9 million in the second quarter of 2019.U.S. average monthly sessions were 85.9 million(2), a decrease of (15%) compared to 101.4 million in the second quarter of 2019.- International average monthly unique users were 7.8 million, a decrease of (21%) compared to 9.8 million in the second quarter of 2019. International average monthly sessions were 17.4 million, a decrease of (28%) compared to 24.1 million in the second quarter of 2019.
(1) Includes users from the Autolist website
(2) Includes sessions from the Autolist website
Third Quarter and Full-Year 2020 Guidance
Third Quarter 2020:
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The third quarter 2020 non-GAAP earnings per share calculation assumes 114.1 million diluted weighted-average common shares outstanding.
Full-Year 2020:
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The full-year non-GAAP earnings per share calculation assumes 114.3 million diluted weighted-average common shares outstanding.
Guidance for the third quarter and full-year 2020 does not include any potential impact of foreign currency exchange gains or losses.
Conference Call and Webcast Information
An audio replay of the call will also be available to investors beginning at approximately
About
Founded in 2006,
© 2020
Cautionary Language Concerning Forward-Looking Statements
This press release includes forward-looking statements. All statements contained in this press release other than statements of historical facts, including, without limitation, statements regarding our future financial and business performance for the third quarter 2020 and full-year 2020, our business and strategy, our ability to help our dealer customers and consumers, the impact of fee reductions that we have provided, our expectations for our enterprise-system upgrade and overhaul of our data architecture to yield improved efficiency in sales account management, and the impact of the COVID-19 pandemic on our business and financial results, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “estimate,” “expect,” “guide,” “intend,” “likely,” “may,” “will” and similar expressions and their negatives are intended to identify forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks and uncertainties, including, without limitation, risks related to our growth and ability to grow our revenue, our relationships with dealers, competition in the markets in which we operate, market growth, our ability to innovate, our ability to realize benefits from our acquisitions and successfully implement the integration strategies in connection therewith, natural disasters, epidemics or pandemics, like COVID-19 that has negatively impacted our business, our ability to realize cost savings and achieve other benefits for our business from our expense reduction efforts, our ability to operate in compliance with applicable laws, as well as other risks and uncertainties as may be detailed from time to time in our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q and other reports we file with the
Unaudited Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
| At June 30, 2020 |
At December 31, 2019 |
|||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 133,199 | $ | 59,920 | ||||
| Investments | 43,000 | 111,692 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of |
16,844 | 22,124 | ||||||
| Prepaid expenses and prepaid income taxes | 11,141 | 10,452 | ||||||
| Deferred contract costs | 9,652 | 9,544 | ||||||
| Other current assets | 1,849 | 4,972 | ||||||
| Restricted cash | 396 | 250 | ||||||
| Total current assets | 216,081 | 218,954 | ||||||
| Property and equipment, net | 26,881 | 27,950 | ||||||
| Intangible assets | 10,599 | 3,920 | ||||||
| 27,623 | 15,207 | |||||||
| Operating lease right-of-use assets | 66,086 | 59,986 | ||||||
| Restricted cash | 10,627 | 10,553 | ||||||
| Deferred tax assets | 37,206 | 42,713 | ||||||
| Deferred contract costs, net of current portion | 8,825 | 10,514 | ||||||
| Other non-current assets | 3,508 | 3,826 | ||||||
| Total assets | $ | 407,436 | $ | 393,623 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 10,438 | $ | 36,731 | ||||
| Accrued expenses, accrued income taxes and other current liabilities | 12,991 | 18,262 | ||||||
| Deferred revenue | 8,195 | 9,984 | ||||||
| Operating lease liabilities | 11,523 | 8,781 | ||||||
| Total current liabilities | 43,147 | 73,758 | ||||||
| Operating lease liabilities | 65,073 | 60,818 | ||||||
| Deferred tax liabilities | 314 | 284 | ||||||
| Other non–current liabilities | 3,047 | 1,908 | ||||||
| Total liabilities | 111,581 | 136,768 | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, |
— | — | ||||||
| Class A common stock, |
93 | 92 | ||||||
| Class B common stock, |
20 | 20 | ||||||
| Additional paid-in capital | 224,418 | 205,234 | ||||||
| Retained earnings | 71,686 | 51,859 | ||||||
| Accumulated other comprehensive loss | (362 | ) | (350 | ) | ||||
| Total stockholders’ equity | 295,855 | 256,855 | ||||||
| Total liabilities and stockholders’ equity | $ | 407,436 | $ | 393,623 | ||||
Unaudited Condensed Consolidated Income Statements
(in thousands, except share and per share data)
| Three Months Ended | Six Months Ended | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Revenue | $ | 94,737 | $ | 145,031 | $ | 252,426 | $ | 280,301 | ||||||||
| Cost of revenue(1) | 9,880 | 8,628 | 21,490 | 16,348 | ||||||||||||
| Gross profit | 84,857 | 136,403 | 230,936 | 263,953 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing | 38,583 | 101,789 | 132,178 | 193,105 | ||||||||||||
| Product, technology, and development | 21,887 | 17,346 | 44,971 | 33,318 | ||||||||||||
| General and administrative | 14,158 | 12,540 | 30,018 | 24,300 | ||||||||||||
| Depreciation and amortization | 1,520 | 1,180 | 3,041 | 2,247 | ||||||||||||
| Total operating expenses | 76,148 | 132,855 | 210,208 | 252,970 | ||||||||||||
| Income from operations | 8,709 | 3,548 | 20,728 | 10,983 | ||||||||||||
| Other income, net: | ||||||||||||||||
| Interest income | 317 | 744 | 879 | 1,488 | ||||||||||||
| Other income, net | 157 | 105 | 323 | 1,007 | ||||||||||||
| Total other income, net | 474 | 849 | 1,202 | 2,495 | ||||||||||||
| Income before income taxes | 9,183 | 4,397 | 21,930 | 13,478 | ||||||||||||
| Provision for (benefit from) income taxes | 2,052 | (1,610 | ) | 2,103 | (5,113 | ) | ||||||||||
| Net income | $ | 7,131 | $ | 6,007 | $ | 19,827 | $ | 18,591 | ||||||||
| Net income per share attributable to common stockholders: | ||||||||||||||||
| Basic | $ | 0.06 | $ | 0.05 | $ | 0.18 | $ | 0.17 | ||||||||
| Diluted | $ | 0.06 | $ | 0.05 | $ | 0.17 | $ | 0.16 | ||||||||
| Weighted-average number of shares of common stock used in computing net income per share attributable to common stockholders: | ||||||||||||||||
| Basic | 112,734,393 | 111,299,345 | 112,544,743 | 111,051,070 | ||||||||||||
| Diluted | 113,737,465 | 113,388,509 | 113,947,241 | 113,398,793 | ||||||||||||
| (1) Includes depreciation and amortization expense for the three months ended |
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Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
| Three Months Ended | Six Months Ended | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Operating Activities | ||||||||||||||||
| Net income | $ | 7,131 | $ | 6,007 | $ | 19,827 | $ | 18,591 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
| Depreciation and amortization | 3,357 | 1,914 | 6,347 | 3,541 | ||||||||||||
| Currency loss (gain) on foreign denominated transactions | 11 | (7 | ) | (91 | ) | (840 | ) | |||||||||
| Deferred taxes | (769 | ) | (1,624 | ) | 4,695 | (5,316 | ) | |||||||||
| Provision for doubtful accounts | 456 | 353 | 1,658 | 368 | ||||||||||||
| Stock-based compensation expense | 11,769 | 8,943 | 23,375 | 16,629 | ||||||||||||
| Amortization of deferred contract costs | 2,805 | 1,804 | 5,641 | 3,634 | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||
| Accounts receivable, net | 252 | (2,319 | ) | 5,653 | (3,838 | ) | ||||||||||
| Prepaid expenses, prepaid income taxes, and other assets | 13,882 | (311 | ) | 2,835 | (2,071 | ) | ||||||||||
| Deferred contract costs | (778 | ) | (3,392 | ) | (4,074 | ) | (7,768 | ) | ||||||||
| Accounts payable | (18,477 | ) | 2,807 | (25,914 | ) | 6,032 | ||||||||||
| Accrued expenses, accrued income taxes, and other current liabilities | (944 | ) | 2,700 | (5,294 | ) | (1,309 | ) | |||||||||
| Deferred revenue | 3,150 | (464 | ) | (1,788 | ) | (332 | ) | |||||||||
| Lease obligations | 1,619 | (500 | ) | 898 | (1,880 | ) | ||||||||||
| Other non-current liabilities | 1,323 | 133 | 1,160 | 288 | ||||||||||||
| Net cash provided by operating activities | 24,787 | 16,044 | 34,928 | 25,729 | ||||||||||||
| Investing Activities | ||||||||||||||||
| Purchases of property and equipment | (1,357 | ) | (2,884 | ) | (2,571 | ) | (8,584 | ) | ||||||||
| Capitalization of website development costs | (1,029 | ) | (716 | ) | (1,695 | ) | (1,527 | ) | ||||||||
| Cash paid for acquisition, net of cash acquired | — | — | (21,004 | ) | (19,139 | ) | ||||||||||
| Investments in certificates of deposit | — | (70,827 | ) | — | (96,527 | ) | ||||||||||
| Maturities of certificates of deposit | 38,281 | 60,000 | 68,692 | 100,000 | ||||||||||||
| Net cash provided by (used in) investing activities | 35,895 | (14,427 | ) | 43,422 | (25,777 | ) | ||||||||||
| Financing Activities | ||||||||||||||||
| Proceeds from exercise of stock options | 415 | 391 | 929 | 1,088 | ||||||||||||
| Payment of finance lease obligations | (9 | ) | (6 | ) | (18 | ) | (12 | ) | ||||||||
| Payment of withholding taxes on net share settlement of restricted stock units |
(2,389 | ) | (4,637 | ) | (5,786 | ) | (8,591 | ) | ||||||||
| Net cash used in financing activities | (1,983 | ) | (4,252 | ) | (4,875 | ) | (7,515 | ) | ||||||||
| Impact of foreign currency on cash, cash equivalents, and restricted cash | 52 | 40 | 24 | 17 | ||||||||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | 58,751 | (2,595 | ) | 73,499 | (7,546 | ) | ||||||||||
| Cash, cash equivalents, and restricted cash at beginning of period | 85,471 | 32,607 | 70,723 | 37,558 | ||||||||||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 144,222 | $ | 30,012 | $ | 144,222 | $ | 30,012 | ||||||||
Unaudited Reconciliation of GAAP Operating Income to Non-GAAP Operating Income and GAAP Operating Margin to Non-GAAP Operating Margin
(in thousands, except percentages)
| Three Months Ended | Six Months Ended | |||||||||||||||
| 2020 | 2019(1) | 2020 | 2019(1) | |||||||||||||
| GAAP operating income | $ | 8,709 | $ | 3,548 | $ | 20,728 | $ | 10,983 | ||||||||
| Stock-based compensation expense | 11,923 | 8,943 | 23,604 | 16,629 | ||||||||||||
| Amortization of intangible assets | 485 | 164 | 917 | 319 | ||||||||||||
| Acquisition-related expenses | 24 | 86 | 968 | 91 | ||||||||||||
| Restructuring expenses(2) | 3,514 | — | 3,514 | — | ||||||||||||
| Non-GAAP operating income | $ | 24,655 | $ | 12,741 | $ | 49,731 | $ | 28,022 | ||||||||
| GAAP operating margin | 9 | % | 2 | % | 8 | % | 4 | % | ||||||||
| Non-GAAP operating margin | 26 | % | 9 | % | 20 | % | 10 | % | ||||||||
| (1) In |
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| (2) Excludes stock-based compensation expense related to the Restructuring of |
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Unaudited Reconciliation of GAAP Net Income to Non-GAAP Net Income
(in thousands, except per share data)
| Three Months Ended | Six Months Ended | |||||||||||||||
| 2020 | 2019(3) | 2020 | 2019(3) | |||||||||||||
| GAAP net income | $ | 7,131 | $ | 6,007 | $ | 19,827 | $ | 18,591 | ||||||||
| Stock-based compensation expense, net of tax(1) | 9,419 | 7,065 | 18,647 | 13,137 | ||||||||||||
| Change in tax provision from stock-based compensation expense(2) | 747 | (2,366 | ) | (486 | ) | (7,689 | ) | |||||||||
| Amortization of intangible assets | 485 | 164 | 917 | 319 | ||||||||||||
| Acquisition-related expenses | 24 | 86 | 968 | 91 | ||||||||||||
| Restructuring expenses(4) | 3,514 | — | 3,514 | — | ||||||||||||
| Non-GAAP net income | $ | 21,320 | $ | 10,956 | $ | 43,387 | $ | 24,449 | ||||||||
| Non-GAAP net income per share: | ||||||||||||||||
| Basic | $ | 0.19 | $ | 0.10 | $ | 0.39 | $ | 0.22 | ||||||||
| Diluted | $ | 0.19 | $ | 0.10 | $ | 0.38 | $ | 0.22 | ||||||||
| Shares used in non-GAAP per share calculations | ||||||||||||||||
| Basic | 112,734 | 111,299 | 112,545 | 111,051 | ||||||||||||
| Diluted | 113,737 | 113,389 | 113,947 | 113,399 | ||||||||||||
| (1) The stock-based compensation amounts reflected in the table above are tax effected at the |
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| (2) This adjustment reflects the tax effect of differences between tax deductions related to stock compensation and the corresponding financial statement expense. | ||||||||||||||||
| (3) In |
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| (4) Excludes stock-based compensation expense related to the Restructuring of |
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Unaudited Reconciliation of GAAP Gross Profit to Non-GAAP Gross Profit and GAAP Gross Profit Margin to Non-GAAP Gross Profit Margin
(in thousands, except percentages)
| Three Months Ended | Six Months Ended | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Revenue | $ | 94,737 | $ | 145,031 | $ | 252,426 | $ | 280,301 | ||||||||
| Cost of revenue | 9,880 | 8,628 | 21,490 | 16,348 | ||||||||||||
| Gross profit | 84,857 | 136,403 | 230,936 | 263,953 | ||||||||||||
| Stock-based compensation expense included in Cost of revenue | 85 | 95 | 184 | 176 | ||||||||||||
| Acquisition-related expenses included in Cost of revenue | — | — | 22 | — | ||||||||||||
| Restructuring expenses included in Cost of revenue | 1,051 | — | 1,051 | — | ||||||||||||
| Non-GAAP gross profit | $ | 85,993 | $ | 136,498 | $ | 232,193 | $ | 264,129 | ||||||||
| GAAP gross profit margin | 90 | % | 94 | % | 91 | % | 94 | % | ||||||||
| Non-GAAP gross profit margin | 91 | % | 94 | % | 92 | % | 94 | % | ||||||||
Unaudited Reconciliation of GAAP Expense to Non-GAAP Expense
(in thousands)
| Three Months Ended |
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| 2020 | 2019 | |||||||||||||||||||||||||||||||||||||||||||||||
| GAAP expense | Stock-based compensation expense |
Amortization of intangible assets |
Acquisition-related expenses | Restructuring expenses(4) | Non-GAAP expense |
GAAP expense | Stock-based compensation expense |
Amortization of intangible assets |
Acquisition-related expenses(3) | Restructuring expenses(4) | Non-GAAP expense |
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| Cost of revenue | $ | 9,880 | $ | (85 | ) | $ | — | $ | — | $ | (1,051 | ) | $ | 8,744 | $ | 8,628 | $ | (95 | ) | $ | — | $ | — | $ | — | $ | 8,533 | |||||||||||||||||||||
| S&M | 38,583 | (3,064 | ) | — | — | (1,668 | ) | 33,851 | 101,789 | (2,560 | ) | — | — | — | 99,229 | |||||||||||||||||||||||||||||||||
| P,T&D(1) | 21,887 | (5,316 | ) | — | — | (679 | ) | 15,892 | 17,346 | (3,997 | ) | — | — | — | 13,349 | |||||||||||||||||||||||||||||||||
| G&A | 14,158 | (3,458 | ) | — | (24 | ) | (116 | ) | 10,560 | 12,540 | (2,291 | ) | — | (86 | ) | — | 10,163 | |||||||||||||||||||||||||||||||
| Depreciation & amortization | 1,520 | — | (485 | ) | — | — | 1,035 | 1,180 | — | (164 | ) | — | — | 1,016 | ||||||||||||||||||||||||||||||||||
| Operating expenses(2) | $ | 76,148 | $ | (11,838 | ) | $ | (485 | ) | $ | (24 | ) | $ | (2,463 | ) | $ | 61,338 | $ | 132,855 | $ | (8,848 | ) | $ | (164 | ) | $ | (86 | ) | $ | — | 123,757 | ||||||||||||||||||
| Total expenses | $ | 86,028 | $ | (11,923 | ) | $ | (485 | ) | $ | (24 | ) | $ | (3,514 | ) | $ | 70,082 | $ | 141,483 | $ | (8,943 | ) | $ | (164 | ) | $ | (86 | ) | $ | — | $ | 132,290 | |||||||||||||||||
| (1) Product, Technology, & Development | ||||||||||||||||||||||||||||||||||||||||||||||||
| (2) Operating expenses include S&M, P,T&D, G&A, and depreciation & amortization | ||||||||||||||||||||||||||||||||||||||||||||||||
| (3) In |
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| (4) Excludes stock-based compensation expense related to the Restructuring of |
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| Six Months Ended |
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| 2020 | 2019 | |||||||||||||||||||||||||||||||||||||||||||||||
| GAAP expense | Stock-based compensation expense |
Amortization of intangible assets |
Acquisition-related expenses | Restructuring expenses(4) | Non-GAAP expense |
GAAP expense | Stock-based compensation expense |
Amortization of intangible assets |
Acquisition-related expenses(3) | Restructuring expenses(4) | Non-GAAP expense |
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| Cost of revenue | $ | 21,490 | $ | (184 | ) | $ | — | $ | (22 | ) | $ | (1,051 | ) | $ | 20,233 | $ | 16,348 | $ | (176 | ) | $ | — | $ | — | $ | — | $ | 16,172 | ||||||||||||||||||||
| S&M | 132,178 | (5,756 | ) | — | (152 | ) | (1,668 | ) | 124,602 | 193,105 | (4,872 | ) | — | — | — | 188,233 | ||||||||||||||||||||||||||||||||
| P,T&D(1) | 44,971 | (10,721 | ) | — | (527 | ) | (679 | ) | 33,044 | 33,318 | (7,180 | ) | — | — | — | 26,138 | ||||||||||||||||||||||||||||||||
| G&A | 30,018 | (6,943 | ) | — | (267 | ) | (116 | ) | 22,692 | 24,300 | (4,401 | ) | — | (91 | ) | — | 19,808 | |||||||||||||||||||||||||||||||
| Depreciation & amortization | 3,041 | — | (917 | ) | — | — | 2,124 | 2,247 | — | (319 | ) | — | — | 1,928 | ||||||||||||||||||||||||||||||||||
| Operating expenses(2) | $ | 210,208 | $ | (23,420 | ) | $ | (917 | ) | $ | (946 | ) | $ | (2,463 | ) | $ | 182,462 | $ | 252,970 | $ | (16,453 | ) | $ | (319 | ) | $ | (91 | ) | $ | — | $ | 236,107 | |||||||||||||||||
| Total expenses | $ | 231,698 | $ | (23,604 | ) | $ | (917 | ) | $ | (968 | ) | $ | (3,514 | ) | $ | 202,695 | $ | 269,318 | $ | (16,629 | ) | $ | (319 | ) | $ | (91 | ) | $ | — | $ | 252,279 | |||||||||||||||||
| (1) Product, Technology, & Development | ||||||||||||||||||||||||||||||||||||||||||||||||
| (2) Operating expenses include S&M, P,T&D, G&A, and depreciation & amortization | ||||||||||||||||||||||||||||||||||||||||||||||||
| (3) In (4) Excludes stock-based compensation expense related to the Restructuring of |
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Unaudited Reconciliation of GAAP Net Income to Adjusted EBITDA
(in thousands)
| Three Months Ended | Six Months Ended | |||||||||||||||
| 2020 | 2019(1) | 2020 | 2019(1) | |||||||||||||
| GAAP net income | $ | 7,131 | $ | 6,007 | $ | 19,827 | $ | 18,591 | ||||||||
| Depreciation and amortization | 3,357 | 1,914 | 6,347 | 3,541 | ||||||||||||
| Stock-based compensation expense | 11,923 | 8,943 | 23,604 | 16,629 | ||||||||||||
| Acquisition-related expenses | 24 | 86 | 968 | 91 | ||||||||||||
| Restructuring expenses(2) | 3,514 | — | 3,514 | — | ||||||||||||
| Other income, net | (474 | ) | (849 | ) | (1,202 | ) | (2,495 | ) | ||||||||
| Provision for (benefit from) income taxes | 2,052 | (1,610 | ) | 2,103 | (5,113 | ) | ||||||||||
| Adjusted EBITDA | $ | 27,527 | $ | 14,491 | $ | 55,161 | $ | 31,244 | ||||||||
| (1) In |
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| (2) Excludes stock-based compensation expense related to the Restructuring of |
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Unaudited Reconciliation of GAAP
(in thousands)
| Three Months Ended | Six Months Ended | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| GAAP net cash and cash equivalents provided by operating activities |
$ | 24,787 | $ | 16,044 | $ | 34,928 | $ | 25,729 | ||||||||
| Purchases of property and equipment | (1,357 | ) | (2,884 | ) | (2,571 | ) | (8,584 | ) | ||||||||
| Capitalization of website development costs | (1,029 | ) | (716 | ) | (1,695 | ) | (1,527 | ) | ||||||||
| Non-GAAP free cash flow | $ | 22,401 | $ | 12,444 | $ | 30,662 | $ | 15,618 | ||||||||
Non-GAAP Financial Measures and Other Business Metrics
To supplement our consolidated financial statements, which are prepared and presented in accordance with Generally Accepted Accounting Principles in
The presentation of non-GAAP financial information and other business metrics is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. While our non-GAAP financial measures and other business metrics are an important tool for financial and operational decision-making and for evaluating our own operating results over different periods of time, we urge investors to review the reconciliation of these financial measures to the comparable GAAP financial measures included above, and not to rely on any single financial measure to evaluate our business.
We define Adjusted EBITDA as net income, adjusted to exclude: depreciation and amortization, stock-based compensation expense, acquisition-related expenses, Restructuring expenses, other income, net, and the provision for (benefit from) income taxes. We have presented Adjusted EBITDA because it is a key measure used by our management and board of directors to understand and evaluate our operating performance, generate future operating plans, and make strategic decisions regarding the allocation of capital. In particular, we believe that the exclusion of certain items in calculating Adjusted EBITDA can produce a useful measure for period-to-period comparisons of our business.
We define Free Cash Flow as cash flow from operations, adjusted to include purchases of property and equipment and capitalization of website development costs. We have presented Free Cash Flow because it is a measure of the Company’s financial performance that represents the cash that the Company is able to generate after expenditures required to maintain or expand our asset base.
We define total non-GAAP, pro forma revenue as the sum of (i) non-GAAP, pro forma marketplace subscription revenue and (ii) GAAP advertising and other revenue. We define non-GAAP, pro forma marketplace subscription revenue as GAAP marketplace subscription revenue, adjusted to exclude the impact of fee reductions and which assumes that we had no incremental churn other than realized in the relevant quarter, such that all reported paying dealers retained their subscriptions at their full subscription level. We believe these non-GAAP financial measures provide useful information that will allow investors to compare our period-to-period revenue trends.
We also monitor operating measures of certain non-GAAP items including non-GAAP gross margin, non-GAAP expense, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income and non-GAAP net income per share. These non-GAAP financial measures exclude the effect of stock-based compensation expense, amortization of intangible assets, restructuring expenses and acquisition-related expenses. Non-GAAP net income and non-GAAP net income per share also exclude the change in tax provision from stock-based compensation expense. We believe that these non-GAAP financial measures provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making.
While a reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to, as applicable, the timing, amount, valuation and number of future employee equity awards, and the uncertainty relating to the timing, frequency and effect of acquisitions as well as restructuring and the significance of the resulting acquisition-related or restructuring expenses, we have provided a reconciliation of non-GAAP financial measures and other business metrics to the nearest comparable GAAP measures in the accompanying financial statement tables included in this press release.
We define a paying dealer as a dealer account with an active, paid marketplace subscription, at the end of a defined period. We had previously defined a paying dealer as a dealer, based on a distinct associated inventory feed, that subscribes to one of our paid Listings packages or Dealer Display advertising and audience targeting products at the end of a defined period.
We define QARSD, which is measured at the end of a fiscal quarter, as the marketplace subscription revenue during that trailing quarter divided by the average number of paying dealers in that marketplace during the quarter. We calculate the average number of paying dealers for a period by adding the number of paying dealers at the end of the prior period and the end of the current period and dividing by two. We have provided QARSD for the three months ended
For each of our websites, we define a monthly unique user as an individual who has visited such website within a calendar month, based on data as measured by Google Analytics. We calculate average monthly unique users as the sum of the monthly unique users in a given period, divided by the number of months in that period. We count a unique user the first time a computer or mobile device with a unique device identifier accesses one of our websites during a calendar month. If an individual accesses a website using a different device within a given month, the first access by each such device is counted as a separate unique user.
We define monthly sessions as the number of distinct visits to our websites that take place each month within a given time frame, as measured and defined by
We define leads as user inquiries via our marketplace to dealers by phone calls, email, or managed text and chat.
Investor Contact:
Senior Vice President,
investors@cargurus.com
Source: CarGurus, Inc.