8-K
0001494259false00014942592023-02-282023-02-28

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 28, 2023

 

CarGurus, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware

001-38233

04-3843478

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

 

2 Canal Park, 4th Floor

Cambridge, Massachusetts 02141

(Address of Principal Executive Offices)

 

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (617) 354-0068

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Class A Common Stock,
par value $0.001 per share

 

CARG

 

The Nasdaq Stock Market LLC
(Nasdaq Global Select Market)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 


 

Item 2.02 Results of Operations and Financial Condition.

On February 28, 2023, CarGurus, Inc. (the “Company”) announced its financial results for the quarter and year ended December 31, 2022. The full text of the press release issued by the Company in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Item 2.02 and in the press release attached as Exhibit 99.1 hereto is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

 

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit

No.

 

Description

99.1

 

Press Release of CarGurus, Inc. dated February 28, 2023, reporting its financial results for the quarter and year ended December 31, 2022, furnished hereto.

104

 

Cover Page Interactive Data File (embedded with the Inline XBRL document).

 

 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

CARGURUS, INC.

 

 

 

 

Date: February 28, 2023

 

By:

/s/ Jason Trevisan

 

 

 

Name: Jason Trevisan

 

 

 

Title: Chief Executive Officer

 

 


EX-99

 

Exhibit 99.1

https://cdn.kscope.io/284d9b40e179a1f945fccdf6dd937e39-img239243378_0.jpg 

 

CarGurus Announces Fourth Quarter and Full-Year 2022 Results

Fourth Quarter Highlights:

Total revenue of $286.7 million, a decrease of (16)% year-over-year
GAAP operating income of $29.6 million; non-GAAP operating income of $23.6 million
GAAP consolidated net income of $23.2 million; non-GAAP consolidated net income of $17.4 million
GAAP net income attributable to common stockholders of $159.2 million; non-GAAP net income attributable to common stockholders of $26.3 million
Consolidated Adjusted EBITDA, a non-GAAP metric, of $27.8 million; Adjusted EBITDA, a non-GAAP metric, of $35.9 million

Full-Year Year Highlights:

Total revenue of $1,655.0 million, an increase of 74% year-over-year
GAAP operating income of $108.5 million; non-GAAP operating income of $172.9 million
GAAP consolidated net income of $79.0 million; non-GAAP consolidated net income of $129.4 million
GAAP net income attributable to common stockholders of $193.8 million; non-GAAP net income attributable to common stockholders of $131.0 million
Cash and cash equivalents of $469.5 million and an available $400 million under its revolving credit facility
Consolidated Adjusted EBITDA, a non-GAAP metric, of $187.7 million; Adjusted EBITDA, a non-GAAP metric, of $186.7 million

CAMBRIDGE, MA: February 28, 2023 — CarGurus, Inc. (Nasdaq: CARG), a multinational, online automotive platform for buying and selling vehicles, today announced financial results for the fourth quarter and full-year ended December 31, 2022.

“Following a transformative 2021, 2022 was a year of activation across our platform. With the theme of ‘activation’ guiding our 2022 roadmap, we were able to bring more dealers on the foundational Listings business, launch and grow the dealer base utilizing Digital Deal, and expand into new geographies with Instant Max Cash Offer. While we are extremely proud of these activations, dynamic changes in automotive market conditions caused us to experience challenges in the second half of the year that required us to recalibrate our goals and address CarOffer’s operational difficulties. Though we are pleased with the results of our efforts in tackling these challenges, and are seeing some encouraging early signs of improvement, we still have work to do to ensure that our operations and products are built with scale and profitability in mind,” said Jason Trevisan, Chief Executive Officer of CarGurus. “We are still marching towards fulfilling our vision of creating the only platform where dealers can source, market, and sell and consumers can shop, finance, buy and sell and we remain excited about the long-term trajectory of our end-to-end transaction-enabled platform. As we continue to balance internal and external factors, I am pleased to share we met and/or exceeded our forecasted guidance for the quarter.”

 


Revenue

Fourth Quarter 2022:

Total revenue was $286.7 million, a decrease of (16)% compared to $339.3 million in the fourth quarter of 2021.
Marketplace revenue was $166.2 million, an increase of 3% compared to $160.8 million in the fourth quarter of 2021.
Wholesale revenue was $23.7 million, a decrease of (71)% compared to $82.6 million in the fourth quarter of 2021.
Product revenue was $96.8 million, an increase of 1% compared to $96.0 million in the fourth quarter of 2021.

Full-Year 2022:

Total revenue was $1,655.0 million, an increase of 74% compared to $951.4 million in 2021.
Marketplace revenue was $658.8 million, an increase of 3% compared to $636.9 million in 2021.
Wholesale revenue was $237.6 million, an increase of 22% compared to $195.1 million in 2021.
Product revenue was $758.6 million, an increase of 536% compared to $119.3 million in 2021.

Operating Income

Fourth Quarter 2022:

GAAP operating income was $29.6 million, a decrease of (33)% compared to $43.9 million in the fourth quarter of 2021.
Non-GAAP operating income was $23.6 million, a decrease of (69)% compared to $76.3 million in the fourth quarter of 2021.

Full-Year 2022:

GAAP operating income was $108.5 million, a decrease of (27)% compared to $148.3 million in 2021.
Non-GAAP operating income was $172.9 million, a decrease of (33)% compared to $256.8 million in 2021.

Consolidated Net Income, Net Income (Loss) Attributable to Common Stockholders, Consolidated Adjusted EBITDA, & Adjusted EBITDA

Fourth Quarter 2022:

GAAP consolidated net income was $23.2 million compared to $34.2 million in the fourth quarter of 2021.
Non-GAAP consolidated net income was $17.4 million compared to $61.8 million in the fourth quarter of 2021.
GAAP net income (loss) attributable to common stockholders was $159.2 million, or $0.20 per fully diluted share, compared to $(79.8) million, or $(0.68) per fully diluted share, in the fourth quarter of 2021.
Non-GAAP net income attributable to common stockholders was $26.3 million, or $0.22 per fully diluted share, compared to $49.7 million, or $0.42 per fully diluted share, in the fourth quarter of 2021.
Consolidated Adjusted EBITDA, a non-GAAP metric, was $27.8 million compared to $80.3 million in the fourth quarter of 2021.
Adjusted EBITDA, a non-GAAP metric, was $35.9 million compared to $67.6 million in the fourth quarter of 2021.

 


Full-Year 2022:

GAAP consolidated net income was $79.0 million in 2022, compared to $110.4 million in 2021.
Non-GAAP consolidated net income was $129.4 million in 2022, compared to $196.4 million in 2021.
GAAP net income (loss) attributable to common stockholders was $193.8 million, or $0.62 per fully diluted share, in 2022, compared to $(0.2) million, or $(0.00) per fully diluted share, in 2021.
Non-GAAP net income attributable to common stockholders was $131.0 million, or $1.02 per fully diluted share, in 2022, compared to $176.3 million, or $1.50 per fully diluted share, in 2021.
Consolidated Adjusted EBITDA, a non-GAAP metric, was $187.7 million in 2022, compared to $270.3 million in 2021.
Adjusted EBITDA, a non-GAAP metric, was $186.7 million in 2022, compared to $249.5 million in 2021.

Balance Sheet and Cash Flow

As of December 31, 2022, CarGurus had cash and cash equivalents of $469.5 million and $400 million available under its revolving credit facility.
CarGurus generated $95.3 million in GAAP cash from operations and $90.5 million in free cash flow, a non-GAAP metric, in the fourth quarter of 2022, compared to having used $(36.8) million in GAAP cash from operations and $(41.6) million in free cash flow, a non-GAAP metric, in the fourth quarter of 2021. For the full-year 2022, CarGurus generated $256.1 million in GAAP cash from operations and $238.8 million in free cash flow, a non-GAAP metric, compared to having generated $98.3 million in GAAP cash from operations and $84.4 million in free cash flow, a non-GAAP metric, in 2021.

Fourth Quarter Business Metrics(1)(2)

U.S. Marketplace segment revenue was $155.1 million in the fourth quarter of 2022, an increase of 4% compared to $149.3 million in the fourth quarter of 2021.
U.S. Marketplace segment operating income was $34.8 million, an increase of 14% compared to $30.4 million in the fourth quarter of 2021.
Digital Wholesale segment revenue was $120.5 million in the fourth quarter of 2022, a decrease of (33)% compared to $178.6 million in the fourth quarter of 2021.
Digital Wholesale segment operating (loss) income was $(2.6) million, a decrease of (116)% compared to $16.7 million in the fourth quarter of 2021.
Total paying dealers were 31,307 at December 31, 2022, an increase of 2% compared to 30,630 at December 31, 2021. Of the total paying dealers at December 31, 2022, U.S. and International accounted for 24,567 and 6,740, respectively, compared to 23,860 and 6,770, respectively, at December 31, 2021.
Quarterly Average Revenue per Subscribing Dealer (“QARSD”) in the U.S. was $5,842 as of December 31, 2022, an increase of 4% compared to $5,633 as of December 31, 2021.
QARSD in International markets was $1,522 as of December 31, 2022, a decrease of (2)% compared to $1,546 as of December 31, 2021.
Website traffic and consumer engagement metrics for the fourth quarter of 2022 were as follows:
U.S. average monthly unique users were 26.4 million, a decrease of (8)% compared to 28.6 million in the fourth quarter of 2021.
U.S. average monthly sessions were 70.0 million, a decrease of (6)% compared to 74.3 million in the fourth quarter of 2021.
International average monthly unique users were 6.4 million, a decrease of (7)% compared to 6.9 million in the fourth quarter of 2021.

 


International average monthly sessions were 15.0 million, a decrease of (5)% compared to 15.8 million in the fourth quarter of 2021.
Transactions were 18,405, a decrease of (75)% compared to the fourth quarter of 2021.

 

(1)
CarOffer website is excluded from the metrics presented for users and sessions.
(2)
Effective the fourth quarter of 2022, the Company revised its segment reporting from one reportable segment to two reportable segments, U.S. Marketplace and Digital Wholesale. The change in segment reporting was a triggering event for an evaluation of goodwill impairment. As such, the Company evaluated for goodwill impairment on December 31, 2022 and did not identify any impairment to its goodwill. The change in segment reporting was made to align with financial reporting results regularly provided to the Company's CODM to assess the business. The CODM reviews segment revenue and segment income (loss) from operations as a proxy for the performance of the Company’s operations. The U.S. Marketplace segment derives revenues from marketplace services from customers within the United States. The Digital Wholesale segment derives revenues from Dealer-to-Dealer and Instant Max Cash Offer ("IMCO") services and products which are sold on the CarOffer platform. The Company also has two operating segments which are individually immaterial and therefore aggregated into the Other category to reconcile reportable segments to the consolidated income statements. The Other category derives revenues from marketplace services from customers outside of the United States.

First Quarter 2023 Guidance

CarGurus anticipates total revenue, product revenue, non-GAAP Consolidated Adjusted EBITDA, and non-GAAP earnings per share ("EPS") to be in the following ranges for the first quarter 2023:
 

Total revenue

$195 million to $215 million

Product revenue

$21 million to $31 million

Non-GAAP Consolidated Adjusted EBITDA

$19 million to $27 million

Non-GAAP EPS

$0.17 to $0.19

 

The first quarter 2023 non-GAAP EPS calculation assumes 116.5 million diluted weighted-average common shares outstanding. This estimated number of shares outstanding excludes the potential dilution from CarGurus utilizing its equity as the sole form of consideration to purchase the remaining 49% interest in CarOffer.

 

The assumptions that are built into guidance for the first quarter of 2023 regarding our pace of paid dealer acquisition, churn, and expansion activity for the relevant period are based on recent market behaviors and industry conditions. Guidance for the first quarter 2023 excludes the effects of significant COVID-19 resurgences, including the reintroduction of lockdowns and/or a slowed pace of recovery, or other macro-level industry issues that result in dealers and consumers materially changing their recent market behaviors or that cause us to enact measures to assist dealers, such as offering fee reductions or waivers as we have done from time to time during the COVID-19 pandemic. Guidance also excludes adjustments to the carrying value of redeemable noncontrolling interests resulting from potential changes in the redemption value of such interests, and any potential impact of foreign currency exchange gains or losses.

 

CarGurus has not reconciled its guidance of non-GAAP consolidated adjusted EBITDA to GAAP consolidated net income or non-GAAP consolidated EPS to GAAP consolidated EPS because the reconciling items between such GAAP and non-GAAP financial measures, which include, as applicable, stock-based compensation, amortization of intangible assets, impairment of long-lived assets, acquisition-related expenses, depreciation expenses, non-intangible amortization, other income (net), the provision for income taxes, income tax effects, and adjustments to the carrying value of redeemable noncontrolling interests resulting from changes in the redemption value of such interests, cannot be reasonably predicted 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 and the significance of the resulting acquisition-related expenses, including adjustments to the carrying value of redeemable noncontrolling interests resulting from potential changes in the redemption value of such interests, and therefore cannot be determined without unreasonable effort. For more information regarding the non-GAAP financial measures discussed in this release, please see the reconciliations of GAAP financial measures to non-GAAP financial measures and the section titled “Non-GAAP Financial Measures and Other Business Metrics” below.

 


Conference Call and Webcast Information

CarGurus will host a conference call and live webcast to discuss its fourth quarter and full year-ended 2022 financial results and business outlook at 5:00 p.m. Eastern Time today, February 28, 2023. To access the conference call, dial (877) 451-6152 for callers in the U.S. or Canada, or (201) 389-0879 for international callers. The webcast will be available live on the Investors section of CarGurus’ website at https://investors.cargurus.com.

An audio replay of the call will also be available to investors beginning at approximately 8:00 p.m. Eastern Time today, February 28, 2023, until 11:59 p.m. Eastern Time on March 14, 2023, by dialing (844) 512-2921 for callers in the U.S. or Canada, or (412) 317-6671 for international callers, and entering passcode 13734788. In addition, an archived webcast will be available on the Investors section of CarGurus’ website at https://investors.cargurus.com.

About CarGurus

CarGurus (Nasdaq: CARG) is a multinational, online automotive platform for buying and selling vehicles that is building upon its industry-leading listings marketplace with both digital retail solutions and the CarOffer online wholesale platform. The CarGurus marketplace gives consumers the confidence to purchase or sell a vehicle either online or in-person, and it gives dealerships the power to accurately price, effectively market, instantly acquire and quickly sell vehicles, all with a nationwide reach. The company uses proprietary technology, search algorithms and data analytics to bring trust, transparency, and competitive pricing to the automotive shopping experience. CarGurus is the most visited automotive shopping site in the U.S. (source: SimilarWeb: Traffic Report, Q4 2022, U.S.).

CarGurus also operates online marketplaces under the CarGurus brand in Canada and the United Kingdom. In the United States and the United Kingdom, CarGurus also operates the Autolist and PistonHeads online marketplaces, respectively, as independent brands.

To learn more about CarGurus, visit www.cargurus.com, and for more information about CarOffer, visit www.caroffer.com.

CarGurus® is a registered trademark of CarGurus, Inc., and CarOffer® is a registered trademark of CarOffer, LLC. All other product names, trademarks and registered trademarks are property of their respective owners.

© 2023 CarGurus, Inc., All Rights Reserved.

 


Cautionary Language Concerning Forward-Looking Statements

This press release includes forward-looking statements. Other than statements of historical facts, all statements contained in this press release, including, without limitation, statements regarding: our future financial and business performance for the first quarter and full-year 2023; our belief that the presentation of non-GAAP financial measures and other business metrics is helpful to our investors; our ability to quickly make transformations necessary for our business to achieve long-term goals; and the impact of macro-level issues on our industry, 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 our 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; global supply chain challenges, increased inflation and interest rates, and other macroeconomic issues; the material weakness identified in our internal controls over financial reporting; changes in our key personnel; 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 Securities and Exchange Commission. Moreover, we operate in very competitive and rapidly changing environments. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, we cannot guarantee that future results, levels of activity, performance, achievements or events and circumstances reflected in the forward-looking statements will occur. We are under no duty to update any of these forward-looking statements after the date of this press release to conform these statements to actual results or revised expectations, except as required by law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this press release.

 

 

 


Unaudited Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

 

 

 

As of December 31,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

469,517

 

 

$

231,944

 

Investments

 

 

 

 

 

90,000

 

Accounts receivable, net of allowance for doubtful accounts of $1,809 and
   $420, respectively

 

 

46,817

 

 

 

189,324

 

Inventory

 

 

5,282

 

 

 

19,656

 

Prepaid expenses, prepaid income taxes and other current assets

 

 

21,972

 

 

 

16,430

 

Deferred contract costs

 

 

8,541

 

 

 

9,045

 

Restricted cash

 

 

5,237

 

 

 

6,709

 

Total current assets

 

 

557,366

 

 

 

563,108

 

Property and equipment, net

 

 

40,128

 

 

 

32,210

 

Intangible assets, net

 

 

53,054

 

 

 

83,915

 

Goodwill

 

 

157,467

 

 

 

158,287

 

Operating lease right-of-use assets

 

 

56,869

 

 

 

60,609

 

Restricted cash

 

 

9,378

 

 

 

9,627

 

Deferred tax assets

 

 

35,488

 

 

 

13,378

 

Deferred contract costs, net of current portion

 

 

8,853

 

 

 

5,867

 

Other non-current assets

 

 

8,499

 

 

 

4,573

 

Total assets

 

$

927,102

 

 

$

931,574

 

Liabilities, redeemable noncontrolling interest and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

32,529

 

 

$

66,153

 

Accrued expenses, accrued income taxes and other current liabilities

 

 

39,193

 

 

 

78,586

 

Deferred revenue

 

 

12,249

 

 

 

12,784

 

Operating lease liabilities

 

 

14,762

 

 

 

13,186

 

Total current liabilities

 

 

98,733

 

 

 

170,709

 

Operating lease liabilities

 

 

51,656

 

 

 

57,519

 

Deferred tax liabilities

 

 

54

 

 

 

58

 

Other non–current liabilities

 

 

5,301

 

 

 

23,639

 

Total liabilities

 

 

155,744

 

 

 

251,925

 

Redeemable noncontrolling interest

 

 

36,749

 

 

 

162,808

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.001 par value per share; 10,000,000 shares authorized;
   no shares issued and outstanding

 

 

 

 

 

 

Class A common stock, $0.001 par value per share; 500,000,000 shares
   authorized; 101,636,649 and 101,773,034 shares issued and outstanding at
   December 31, 2022 and 2021, respectively

 

 

102

 

 

 

102

 

Class B common stock, $0.001 par value per share; 100,000,000 shares
   authorized; 15,999,173 and 15,999,173 shares issued and outstanding at
   December 31, 2022 and 2021, respectively

 

 

16

 

 

 

16

 

Additional paid–in capital

 

 

413,092

 

 

 

387,868

 

Retained earnings

 

 

323,043

 

 

 

129,258

 

Accumulated other comprehensive loss

 

 

(1,644

)

 

 

(403

)

Total stockholders’ equity

 

 

734,609

 

 

 

516,841

 

Total liabilities, redeemable noncontrolling interest and stockholders’ equity

 

$

927,102

 

 

$

931,574

 

 

 


Unaudited Condensed Consolidated Income Statements

(in thousands, except share and per share data)

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Marketplace

 

$

166,247

 

 

$

160,759

 

 

$

658,771

 

 

$

636,942

 

Wholesale

 

 

23,659

 

 

 

82,595

 

 

 

237,635

 

 

 

195,127

 

Product

 

 

96,838

 

 

 

95,988

 

 

 

758,629

 

 

 

119,304

 

Total revenue

 

 

286,744

 

 

 

339,342

 

 

 

1,655,035

 

 

 

951,373

 

Cost of revenue(1)(2)

 

 

 

 

 

 

 

 

 

 

 

 

Marketplace

 

 

15,618

 

 

 

13,703

 

 

 

56,040

 

 

 

47,689

 

Wholesale

 

 

29,957

 

 

 

52,335

 

 

 

176,446

 

 

 

127,679

 

Product

 

 

104,127

 

 

 

93,569

 

 

 

764,996

 

 

 

118,647

 

Total cost of revenue

 

 

149,702

 

 

 

159,607

 

 

 

997,482

 

 

 

294,015

 

Gross profit

 

 

137,042

 

 

 

179,735

 

 

 

657,553

 

 

 

657,358

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

70,203

 

 

 

89,639

 

 

 

336,708

 

 

 

290,574

 

Product, technology, and development

 

 

31,553

 

 

 

27,090

 

 

 

123,768

 

 

 

106,423

 

General and administrative

 

 

1,722

 

 

 

30,583

 

 

 

73,117

 

 

 

97,678

 

Depreciation and amortization(2)

 

 

3,943

 

 

 

(11,501

)

 

 

15,482

 

 

 

14,415

 

Total operating expenses

 

 

107,421

 

 

 

135,811

 

 

 

549,075

 

 

 

509,090

 

Income from operations

 

 

29,621

 

 

 

43,924

 

 

 

108,478

 

 

 

148,268

 

Other income, net:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

2,339

 

 

 

26

 

 

 

3,845

 

 

 

120

 

Other income (expense), net

 

 

620

 

 

 

640

 

 

 

(961

)

 

 

972

 

Total other income, net

 

 

2,959

 

 

 

666

 

 

 

2,884

 

 

 

1,092

 

Income before income taxes

 

 

32,580

 

 

 

44,590

 

 

 

111,362

 

 

 

149,360

 

Provision for income taxes

 

 

9,349

 

 

 

10,431

 

 

 

32,408

 

 

 

38,987

 

Consolidated net income

 

 

23,231

 

 

 

34,159

 

 

 

78,954

 

 

 

110,373

 

Net (loss) income attributable to redeemable noncontrolling interest

 

 

(1,562

)

 

 

4,527

 

 

 

(5,433

)

 

 

1,129

 

Net income attributable to CarGurus, Inc.

 

$

24,793

 

 

$

29,632

 

 

$

84,387

 

 

$

109,244

 

Accretion of redeemable noncontrolling interest to redemption value

 

 

(134,454

)

 

 

109,398

 

 

 

(109,398

)

 

 

109,398

 

Net income (loss) attributable to common stockholders

 

$

159,247

 

 

$

(79,766

)

 

$

193,785

 

 

$

(154

)

Net income (loss) per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.34

 

 

$

(0.68

)

 

$

1.64

 

 

$

(0.00

)

Diluted

 

$

0.20

 

 

$

(0.68

)

 

$

0.62

 

 

$

(0.00

)

Weighted–average number of shares of common stock used in
   computing net income (loss) per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

118,783,793

 

 

 

117,696,590

 

 

 

118,474,991

 

 

 

117,142,062

 

Diluted

 

 

119,117,004

 

 

 

117,696,590

 

 

 

128,150,974

 

 

 

117,142,062

 

(1) Includes depreciation and amortization expense for the three months ended December 31, 2022 and 2021 and for the years ended December 31, 2022 and 2021 of $7,789, $22,490, $29,852 and $26,061, respectively.

 

(2) We have recorded a $14.9 million adjustment related to the presentation of amortization of developed technology, acquired in the CarOffer acquisition on January 14, 2021, in our consolidated statement of operations for the three and twelve months ended December 31, 2021. We had previously recorded amortization expense as a component of operating expenses but given the underlying nature of the asset we believe the amortization more closely aligns with cost of goods sold. We assessed the materiality of this reclass on the historical financial statements, individually and in aggregate, and concluded the effect of the reclass was not material to our consolidated financial statements for any of the periods.

 

 

 


Unaudited Segment Revenue

(in thousands)

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Segment Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Marketplace

 

$

155,092

 

 

$

149,301

 

 

$

614,136

 

 

$

594,602

 

Digital Wholesale

 

 

120,497

 

 

 

178,583

 

 

 

996,264

 

 

 

314,431

 

Other

 

 

11,155

 

 

 

11,458

 

 

 

44,635

 

 

 

42,340

 

Total

 

$

286,744

 

 

$

339,342

 

 

$

1,655,035

 

 

$

951,373

 

 

Unaudited Segment Income (loss) from Operations

(in thousands)

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Segment Income (loss) from Operations:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Marketplace

 

$

34,760

 

 

$

30,363

 

 

$

125,796

 

 

$

151,343

 

Digital Wholesale

 

 

(2,633

)

 

 

16,654

 

 

 

(9,174

)

 

 

7,189

 

Other

 

 

(2,506

)

 

 

(3,093

)

 

 

(8,144

)

 

 

(10,264

)

Total

 

$

29,621

 

 

$

43,924

 

 

$

108,478

 

 

$

148,268

 

 

 


Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating Activities

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated net income

 

$

23,231

 

 

$

34,159

 

 

$

78,954

 

 

$

110,373

 

Adjustments to reconcile consolidated net income to net cash provided
       by (used in) operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

11,732

 

 

 

10,989

 

 

 

45,334

 

 

 

40,476

 

Currency (gain) loss on foreign denominated transactions

 

 

(462

)

 

 

2

 

 

 

155

 

 

 

(70

)

Deferred taxes

 

 

8,551

 

 

 

389

 

 

 

(22,114

)

 

 

6,163

 

Provision for doubtful accounts

 

 

640

 

 

 

272

 

 

 

1,769

 

 

 

999

 

Stock-based compensation expense

 

 

13,227

 

 

 

10,974

 

 

 

54,777

 

 

 

53,525

 

Amortization of deferred financing costs

 

 

129

 

 

 

 

 

 

136

 

 

 

 

Amortization of deferred contract costs

 

 

2,735

 

 

 

3,010

 

 

 

11,067

 

 

 

12,653

 

Impairment of long-lived assets

 

 

165

 

 

 

777

 

 

 

165

 

 

 

3,128

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

89,470

 

 

 

(123,176

)

 

 

152,954

 

 

 

(174,771

)

Inventory

 

 

22,884

 

 

 

(13,261

)

 

 

14,374

 

 

 

(17,318

)

Prepaid expenses, prepaid income taxes, and other assets

 

 

8,102

 

 

 

(2,098

)

 

 

(6,573

)

 

 

(5,068

)

Deferred contract costs

 

 

(4,608

)

 

 

(1,192

)

 

 

(13,697

)

 

 

(7,714

)

Accounts payable

 

 

(36,357

)

 

 

10,849

 

 

 

(35,047

)

 

 

35,397

 

Accrued expenses, accrued income taxes, and other liabilities

 

 

(44,001

)

 

 

31,009

 

 

 

(25,077

)

 

 

35,817

 

Deferred revenue

 

 

(505

)

 

 

271

 

 

 

(525

)

 

 

3,661

 

Lease obligations

 

 

370

 

 

 

255

 

 

 

(546

)

 

 

1,041

 

Net cash provided by (used in) operating activities

 

 

95,303

 

 

 

(36,771

)

 

 

256,106

 

 

 

98,292

 

Investing Activities

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(1,756

)

 

 

(2,778

)

 

 

(5,924

)

 

 

(7,713

)

Capitalization of website development costs

 

 

(3,071

)

 

 

(2,018

)

 

 

(11,346

)

 

 

(6,163

)

Cash paid for acquisitions, net of cash acquired

 

 

 

 

 

 

 

 

 

 

 

(64,273

)

Investments in certificates of deposit

 

 

 

 

 

(30,000

)

 

 

 

 

 

(120,000

)

Maturities of certificates of deposit

 

 

 

 

 

30,000

 

 

 

90,000

 

 

 

130,000

 

Net cash (used in) provided by investing activities

 

 

(4,827

)

 

 

(4,796

)

 

 

72,730

 

 

 

(68,149

)

Financing Activities

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock upon exercise of stock options

 

 

2

 

 

 

126

 

 

 

721

 

 

 

663

 

Payment of finance lease obligations

 

 

(17

)

 

 

(10

)

 

 

(68

)

 

 

(39

)

Payment of withholding taxes on net share settlements of restricted stock units

 

 

(1,851

)

 

 

(4,074

)

 

 

(16,022

)

 

 

(15,388

)

Repurchase of common stock

 

 

(14,428

)

 

 

 

 

 

(14,428

)

 

 

 

Repayment of line of credit

 

 

 

 

 

 

 

 

 

 

 

(14,250

)

Payment of deferred financing costs

 

 

 

 

 

 

 

 

(2,578

)

 

 

 

Payment of tax distributions to redeemable noncontrolling interest holders

 

 

(70

)

 

 

 

 

 

(19,913

)

 

 

 

Change in gross advance payments received from third-party payment processor

 

 

(18,567

)

 

 

46,822

 

 

 

(40,332

)

 

 

46,822

 

Net cash (used in) provided by financing activities

 

 

(34,931

)

 

 

42,864

 

 

 

(92,620

)

 

 

17,808

 

Impact of foreign currency on cash, cash equivalents, and restricted cash

 

 

1,276

 

 

 

(238

)

 

 

(364

)

 

 

(597

)

Net increase in cash, cash equivalents, and restricted cash

 

 

56,821

 

 

 

1,059

 

 

 

235,852

 

 

 

47,354

 

Cash, cash equivalents, and restricted cash at beginning of period

 

 

427,311

 

 

 

247,221

 

 

 

248,280

 

 

 

200,926

 

Cash, cash equivalents, and restricted cash at end of period

 

$

484,132

 

 

$

248,280

 

 

$

484,132

 

 

$

248,280

 

 

 

 


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

 

 

Year Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

GAAP operating income

 

$

29,621

 

 

$

43,924

 

 

$

108,478

 

 

$

148,268

 

Stock-based compensation expense

 

 

(13,671

)

 

 

24,608

 

 

 

33,682

 

 

 

77,710

 

Amortization of intangible assets

 

 

7,670

 

 

 

7,794

 

 

 

30,716

 

 

 

30,152

 

Acquisition-related expenses

 

 

 

 

 

 

 

 

 

 

 

709