0000950170-23-005473 | 10-K | XBRL Viewer

$ 1,655,035

$ 951,373

$ 551,451

Product, technology, and development

^[1]

997,482

294,015

42,706

Gross profit

657,553

657,358

508,745

Operating expenses:

Sales and marketing

336,708

290,574

256,979

123,768

106,423

85,726

General and administrative

73,117

97,678

62,166

Depreciation and amortization

15,482

14,415

6,118

Total operating expenses

549,075

509,090

410,989

Income from operations

108,478

148,268

97,756

Other income, net:

Interest income

3,845

120

1,075

Other (expense) income, net

(961)

972

279

Total other income, net

2,884

1,092

1,354

Income before income taxes

111,362

149,360

99,110

Provision for income taxes

32,408

38,987

21,557

Consolidated net income

78,954

110,373

77,553

Net (loss) income attributable to redeemable noncontrolling interest

(5,433)

1,129

Net income Attributable to CarGurus, Inc

84,387

109,244

77,553

Accretion of redeemable noncontrolling interest to redemption value

(109,398)

109,398

Net income (loss) attributable to common stockholders

$ 193,785

$ (154)

$ 77,553

Net income (loss) per share attributable to common stockholders: (Note 11)

Basic

$ 1.64

$ 0.00

$ 0.69

Diluted

$ 0.62

$ 0.00

$ 0.68

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

Basic

118,474,991

117,142,062

112,854,524

Diluted

128,150,974

117,142,062

113,849,815

Marketplace

Revenue

$ 658,771

$ 636,942

$ 551,451

^[1]

56,040

47,689

$ 42,706

Wholesale

Revenue

237,635

195,127

^[1]

176,446

127,679

Product

Revenue

758,629

119,304

^[1]

$ 764,996

$ 118,647

[1]	Includes depreciation and amortization expense for the years ended December 31, 2022, 2021, and 2020 of $29,852, $26,061, and $5,224, respectively.

Consolidated Income Statements (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Income Statement [Abstract]
Depreciation and amortization expense	$ 29,852	$ 26,061	$ 5,224

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Statement of Comprehensive Income [Abstract]
Consolidated net income	$ 78,954	$ 110,373	$ 77,553
Other comprehensive income:
Foreign currency translation adjustment	(1,241)	(2,283)	2,230
Consolidated comprehensive income	77,713	108,090	79,783
Comprehensive (loss) income attributable to redeemable noncontrolling interests	(5,433)	1,129
Comprehensive income attributable to CarGurus, Inc.	$ 83,146	$ 106,961	$ 79,783

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income (loss) and other comprehensive income (loss), attributable to noncontrolling interests. Excludes changes in equity resulting from investments by owners and distributions to owners.

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income and other comprehensive income. Excludes changes in equity resulting from investments by owners and distributions to owners.

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

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Consolidated Statements of Redeemable Noncontrolling Interest and Stockholders' Equity - USD ($) $ in Thousands	Total	Class A Common Stock	Class B Common Stock	Common Stock Class A Common Stock	Common Stock Class B Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Beginning balance at Dec. 31, 2019	$ 256,855			$ 92	$ 20	$ 205,234	$ 51,859	$ (350)
Beginning balance, Shares at Dec. 31, 2019				91,819,649	20,314,644
Redeemable Noncontrolling Interest, Beginning balance at Dec. 31, 2019	0
Net (loss) income	77,553						77,553
Stock–based compensation expense	46,996					46,996
Issuance of common stock upon exercise of stock options	1,136					1,136
Issuance of common stock upon exercise of stock options, Shares				352,212
Issuance of common stock upon vesting of restricted stock units				$ 1		(1)
Issuance of common stock upon vesting of restricted stock units, Shares				1,347,464
Payment of withholding taxes on net share settlements of restricted stock units	(11,184)					(11,184)
Payment of withholding taxes on net share settlements of restricted stock units, Shares		(447,160)		(447,160)
Conversion of common stock				$ 1
Conversion of common stock, shares issued				1,238,144
Conversion of common stock, shares converted					(1,238,144)
Conversion of common stock, value					$ (1)
Foreign currency translation adjustment	2,230							2,230
Ending balance at Dec. 31, 2020	373,586			$ 94	$ 19	242,181	129,412	1,880
Ending balance, Shares at Dec. 31, 2020				94,310,309	19,076,500
Redeemable Noncontrolling Interest, Ending Balance at Dec. 31, 2020	0
Net (loss) income	109,244						109,244
Redeemable noncontrolling interest, net (loss) income	1,129
Stock–based compensation expense	56,772					56,772
Issuance of common stock upon exercise of stock options	663					663
Issuance of common stock upon exercise of stock options, Shares				222,147
Issuance of common stock upon vesting of restricted stock units				$ 2		(2)
Issuance of common stock upon vesting of restricted stock units, Shares				1,575,206
Payment of withholding taxes on net share settlements of restricted stock units	(15,388)					(15,388)
Payment of withholding taxes on net share settlements of restricted stock units, Shares		(527,237)		(527,237)
Conversion of common stock				$ 3
Conversion of common stock, shares issued				3,077,327
Conversion of common stock, shares converted					(3,077,327)
Conversion of common stock, value					$ (3)
Issuance of common stock upon for acquisition	103,645			$ 3		103,642
Issuance of common stock upon for acquisition, Shares				3,115,282
Acquisition of a 51% interest in CarOffer, LLC	60,982
Redeemable noncontrolling interest, accretion to redemption value	109,398
Accretion to redeemable noncontrolling interest redemption value	(109,398)						(109,398)
Tax distributions to redeemable noncontrolling interest holders	(8,701)
Foreign currency translation adjustment	(2,283)							(2,283)
Ending balance at Dec. 31, 2021	516,841			$ 102	$ 16	387,868	129,258	(403)
Ending balance, Shares at Dec. 31, 2021		101,773,034	15,999,173	101,773,034	15,999,173
Redeemable Noncontrolling Interest, Ending Balance at Dec. 31, 2021	162,808
Net (loss) income	84,387						84,387
Redeemable noncontrolling interest, net (loss) income	(5,433)
Stock–based compensation expense	59,245					59,245
Issuance of common stock upon exercise of stock options	721					721
Issuance of common stock upon exercise of stock options, Shares				131,061
Issuance of common stock upon vesting of restricted stock units				$ 1		(1)
Issuance of common stock upon vesting of restricted stock units, Shares				1,649,294
Payment of withholding taxes on net share settlements of restricted stock units	(16,025)					(16,025)
Payment of withholding taxes on net share settlements of restricted stock units, Shares		(566,267)		(566,267)
Repurchase of common stock	(18,717)			$ (1)		(18,716)
Repurchase of common stock, Shares				(1,350,473)
Redeemable noncontrolling interest, accretion to redemption value	(109,398)
Accretion to redeemable noncontrolling interest redemption value	109,398						109,398
Tax distributions to redeemable noncontrolling interest holders	(11,228)
Foreign currency translation adjustment	(1,241)							(1,241)
Ending balance at Dec. 31, 2022	734,609			$ 102	$ 16	$ 413,092	$ 323,043	$ (1,644)
Ending balance, Shares at Dec. 31, 2022		101,636,649	15,999,173	101,636,649	15,999,173
Redeemable Noncontrolling Interest, Ending Balance at Dec. 31, 2022	$ 36,749

Consolidated Statements of Redeemable Noncontrolling Interest and Stockholders' Equity (Parenthetical)	Dec. 31, 2022	Dec. 31, 2021	Jan. 14, 2021
Car Offer
Business acquisition, percentage of equity interest acquired	51.00%	51.00%	51.00%

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
Consolidated Statements of Cash Flows - USD ($)	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Operating Activities
Consolidated net income	$ 78,954,000	$ 110,373,000	$ 77,553,000
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization	45,334,000	40,476,000	10,191,000
Currency loss (gain) on foreign denominated transactions	155,000	(70,000)	23,000
Deferred taxes	(22,114,000)	6,163,000	22,235,000
Provision for doubtful accounts	1,769,000	999,000	1,930,000
Stock-based compensation expense	54,777,000	53,525,000	45,090,000
Amortization of deferred financing costs	136,000	0	0
Amortization of deferred contract costs	11,067,000	12,653,000	11,605,000
Impairment of long-lived assets	165,000	3,128,000	1,151,000
Changes in operating assets and liabilities:
Accounts receivable	152,954,000	(174,771,000)	3,889,000
Inventory	14,374,000	(17,318,000)
Prepaid expenses, prepaid income taxes, and other assets	(6,573,000)	(5,068,000)	3,484,000
Deferred contract costs	(13,697,000)	(7,714,000)	(11,378,000)
Accounts payable	(35,047,000)	35,397,000	(15,077,000)
Accrued expenses, accrued income taxes, and other liabilities	(25,077,000)	35,817,000	7,450,000
Deferred revenue	(525,000)	3,661,000	(861,000)
Lease obligations	(546,000)	1,041,000	(542,000)
Net cash provided by operating activities	256,106,000	98,292,000	156,743,000
Investing Activities
Purchases of property and equipment	(5,924,000)	(7,713,000)	(2,952,000)
Capitalization of website development costs	(11,346,000)	(6,163,000)	(4,579,000)
Cash paid for acquisitions, net of cash acquired		(64,273,000)	(21,056,000)
Investments in certificates of deposit		(120,000,000)	(100,000,000)
Maturities of certificates of deposit	90,000,000	130,000,000	111,692,000
Net cash provided by (used in) investing activities	72,730,000	(68,149,000)	(16,895,000)
Financing Activities
Proceeds from issuance of common stock upon exercise of stock options	721,000	663,000	1,136,000
Payment of finance lease obligations	(68,000)	(39,000)	(37,000)
Payment of withholding taxes on net share settlements of restricted stock units	(16,022,000)	(15,388,000)	(11,184,000)
Repurchase of common stock	(14,428,000)
Repayment of line of credit		(14,250,000)
Payment of deferred financing costs	(2,578,000)
Payment of tax distributions to redeemable noncontrolling interest holders	(19,913,000)
Change in gross advance payments received from third-party payment processor	(40,332,000)	46,822,000
Net cash (used in) provided by financing activities	(92,620,000)	17,808,000	(10,085,000)
Impact of foreign currency on cash, cash equivalents, and restricted cash	(364,000)	(597,000)	440,000
Net increase in cash, cash equivalents, and restricted cash	235,852,000	47,354,000	130,203,000
Cash, cash equivalents, and restricted cash at beginning of period	248,280,000	200,926,000	70,723,000
Cash, cash equivalents, and restricted cash at end of period	484,132,000	248,280,000	200,926,000
Supplemental disclosure of cash flow information:
Cash paid for income taxes	61,001,000	27,520,000	2,831,000
Cash paid for operating lease liabilities	17,548,000	16,168,000	14,941,000
Cash paid for interest	64,000
Supplemental noncash disclosure of cash flow information:
Unpaid purchases of property and equipment, capitalized website development, capitalized internal-use software and capitalized hosting arrangements	1,927,000	478,000	136,000
Unpaid repurchases of common stock	4,289,000
Capitalized stock-based compensation expense in website development and internal-use software costs and hosting arrangements	4,468,000	3,247,000	$ 1,906,000
Obtaining a right-of-use asset in exchange for a finance lease liability		664,000
Obtaining a right-of-use asset in exchange for an operating lease liability	9,845,000	12,336,000
Issuance of stock for acquisition		103,645,000
Accretion of redeemable noncontrolling interest to redemption value	(109,398,000)	109,398,000
Accrued tax distributions to redeemable noncontrolling interest holders	$ 16,000	$ 8,701,000

Organization and Business Description

12 Months Ended

Dec. 31, 2022

Organization and Business Description

1. Organization and Business Description

CarGurus, Inc. (the "Company") 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 digital wholesale platform. The CarGurus platform gives consumers the confidence to buy and/or sell a vehicle either online or in-person, and it gives dealerships the power to accurately price, instantly acquire, effectively market, 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.

The Company is headquartered in Cambridge, Massachusetts and was incorporated in the State of Delaware on June 26, 2015.

The Company operates principally in the United States. In the United States, it also operates as independent brands the Autolist online marketplace, which it wholly owns, and the CarOffer, LLC (“CarOffer”) digital wholesale marketplace, in which it holds a 51% equity interest. In addition to the United States, the Company operates online marketplaces under the CarGurus brand in Canada and the United Kingdom. In the United Kingdom, it also operates as an independent brand the PistonHeads online marketplace, which it wholly owns. The Company also operated online marketplaces in Germany, Italy, and Spain until it ceased the operations of each of these marketplaces in the second quarter of 2020.

The Company has subsidiaries in the United States, Canada, Ireland, and the United Kingdom and, prior to the first quarter of 2022, had two reportable segments – United States and International. Effective as of the first quarter of 2022, the Company revised its segment reporting from two reportable segments to one reportable segment. Effective as of 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. See Note 13 of these consolidated financial statements for further segment reporting and geographical information.

The Company is subject to a number of risks and uncertainties common to companies in its and similar industries and stages of development including, but not limited to, rapid technological changes, competition from substitute products and services from larger companies, management of international activities, protection of proprietary rights, patent litigation, and dependence on key individuals.

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2022

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

While the Company disclosed total revenue in the consolidated income statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 12, 2021, the accompanying consolidated income statements for the year ended December 31, 2020 present revenues disaggregated into marketplace, wholesale, and product revenues to conform to the prior and current year presentation, as a result of the acquisition of a 51% interest in CarOffer.

While the Company disclosed impairment of long-lived assets within depreciation and amortization in the consolidated statements of cash flows in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on February 12, 2021, the accompanying consolidated statements of cash flows for the year ended December 31, 2020 present impairment of long-lived assets separately to conform to the prior and current year presentation, as impairments of long-lived assets were material for the year ended December 31, 2021.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Subsequent Event Considerations

The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence for certain estimates or to identify matters that require additional disclosure. The Company has evaluated all subsequent events and determined that there are no material recognized or unrecognized subsequent events requiring disclosure.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.

Although the Company regularly assesses these estimates, actual results could differ materially from these estimates. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results may differ from management’s estimates if these results differ from historical experience, or other assumptions do not turn out to be substantially accurate, even if such assumptions are reasonable when made. Changes in estimates are recognized in the period in which they become known.

Critical estimates relied upon in preparing the consolidated financial statements include the determination of sales allowance and variable consideration in the Company’s revenue recognition, allowance for doubtful accounts, the impairment of long-lived assets, the capitalization of product, technology, and development costs for website development, internal-use software and hosting arrangements, the valuation of acquired assets and liabilities, the valuation and recoverability of intangible assets and goodwill, the valuation of redeemable noncontrolling interest, the recoverability of the Company’s net deferred tax assets and related valuation allowance, the valuation of inventory, and the valuation of equity and liability-classified compensation awards. Accordingly, the Company considers these to be its critical accounting estimates, and believes that of the Company’s significant accounting policies, these involve the greatest degree of judgment and complexity.

Concentration of Credit Risk

The Company has no significant off-balance sheet risk, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents, investments, and trade accounts receivable.

The Company maintains its cash, cash equivalents, and investments principally with accredited financial institutions of high credit standing. Although the Company deposits its cash, cash equivalents, and investments with multiple financial institutions, its deposits may often exceed governmental insured limits.

The Company routinely assesses the creditworthiness of its customers and does not require collateral. The Company generally has not experienced any material losses related to receivables from individual customers, or groups of customers. The majority of the Company's accounts receivable results from wholesale and product revenue transactions. The Company has had no material losses related to wholesale and product receivables as it does not release title to the vehicle until successfully collecting funds from the buying dealer. Titling is handled by the Company's payment processor and is held in escrow until it collects funds from the buying dealer (i.e., title is legally transferred from the selling party to the buying party upon signing of bill of sale, but title is held in escrow by the payment processor until payment is received). Due to these factors, no additional credit risk beyond amounts provided for collection losses is believed by management to be probable in the Company’s accounts receivable.

As of December 31, 2022, one customer accounted for 13% of net accounts receivable. As of December 31, 2021, two customers accounted for 47% and 18% of net accounts receivable, respectively. The remainder of the accounts receivable was dispersed among more than 1,000 customers. The customers who account for greater than 10% of net accounts receivable are related to wholesale and product receivables. The collection risk associated with these customers is mitigated because, as discussed above, the Company does not release title on vehicles until funds are successfully collected. Furthermore, there is no significant credit risk with respect to accounts receivable because, other than the receivables associated with these customers, credit risk with respect to accounts receivable is dispersed due to the large number of customers.

For the years ended December 31, 2022, 2021, and 2020, no individual customer accounted for more than 10% of total revenue.

Cash, Cash Equivalents, and Investments

Cash and cash equivalents primarily consist of cash on deposit with banks, and amounts held in interest‑bearing money market accounts. Cash equivalents are carried at cost, which approximates their fair market value.

The Company considers all highly liquid investments with an original maturity of 90 days or less at the date of purchase to be cash equivalents. Investments not classified as cash equivalents with maturities less than one year from the balance sheet date are classified as short‑term investments, while investments with maturities in excess of one year from the balance sheet date are classified as long‑term investments. Management determines the appropriate classification of investments at the time of purchase, and re‑evaluates such determination at each balance sheet date. Investments are carried at cost, which approximates their fair market value.

The Company’s investment policy, which was approved by the Audit Committee of the Company’s board of directors (the “Board”), permits investments in fixed income securities, including U.S. government and agency securities, non‑U.S. government securities, money market instruments, commercial paper, certificates of deposit, corporate bonds, and asset‑backed securities.

As of December 31, 2022, the Company held no investments.

As of December 31, 2021, investments consisted of U.S. certificates of deposit (“CDs”) with remaining maturities of less than twelve months. The Company classifies CDs with readily determinable market values as held‑to‑maturity, because it is the Company’s intention to hold such investments until they mature. As such, as of December 31, 2021, investments were recognized at amortized cost. The Company adjusts the cost of investments for amortization of premiums and accretion of discounts to maturity, if any. For the years ended December 31, 2021 and 2020, the Company did not have any premiums or discounts. Realized gains and losses from sales of the Company’s investments are recognized within other (expense) income, net in the consolidated income statements. For the years ended December 31, 2021 and 2020, there were no realized gains or losses on investments.

The Company reviews investments for other‑than‑temporary impairment whenever the fair value of an investment is less than the amortized cost and evidence indicates that an investment’s carrying amount is not recoverable within a reasonable period of time. Other‑than‑temporary impairments of investments are recognized in the consolidated income statements if the Company has experienced a credit loss or if it is more likely than not that the Company will be required to sell the investment before recovery of the amortized cost basis. Evidence considered in this assessment includes reasons for the impairment, compliance with the Company’s investment policy, the severity and duration of the impairment, and changes in value subsequent to the end of the period. For the years ended December 31, 2021 and 2020, the Company determined that no other‑than‑temporary impairments were required to be recognized in the consolidated income statements.

Restricted Cash

As of December 31, 2022 and 2021, restricted cash was $14,615 and $16,336, respectively, and primarily related to cash held at a financial institution in an interest-bearing cash account as collateral for the letters of credit related to the contractual provisions for the Company’s building leases and pass-through payments from customers related to the Company’s wholesale business. As of December 31, 2022 and 2021, portions of restricted cash were classified as short-term assets and long-term assets, as disclosed in the consolidated balance sheets.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded based on the amount due from the customer and a third-party payment processor. Accounts receivable do not bear interest.

The Company is exposed to credit losses primarily through its trade accounts receivable, which includes receivables in transit from a third-party payment processor. The third-party payment processor collects customer payments on the Company's behalf and remits them to the Company. Customer payments received by the third-party payment processor, but not remitted to the Company as of period end are deemed to be receivables in transit. Additionally, the third-party payment processor provides payments in advance for certain selling dealers. If the third-party payment processor does not receive buying dealer payments associated with the transaction paid in advance, the Company would guarantee losses incurred by the third-party payment processor and the balance would be deducted from future remittances to the Company. To date, losses associated with these guarantees have not been material. Payments received in advance are presented as cash flows from financing activities in the consolidated statements of cash flows.

The Company offsets gross trade accounts receivables in transit from the third-party payment processor with payments received in advance from the third-party payment processor as it has the right of offset. At any point in time, the Company could have amounts due from the third-party payment processor for funds the third-party payment processor has collected from buying dealers and has not yet remitted to the Company (i.e. receivables in transit), as well as amounts paid by the third-party payment processor to the Company in advance of collecting payments from buying dealers (i.e. payments received in advance). Therefore, as the Company has the right to offset, the Company can either have a net receivable balance due from the third-party payment processor which is recognized within accounts receivable, or the Company can have a net liability which is recognized within accrued expenses if the advance payments exceed the receivable position from the third-party payment processor as of the balance sheet date.

As of December 31, 2022, gross trade accounts receivable from receivables in transit from the third-party payment processor was $7,122, offset by payments received in advance of $6,490, which resulted in a net receivable of $632 recognized within accounts receivable, net in the consolidated balance sheets. As of December 31, 2021, gross trade accounts receivable from receivables in transit from the third-party payment processor was $18,747, offset by payments received in advance of $46,822, which resulted in a net liability of $28,075 recognized within accrued expenses, accrued income taxes and other current liabilities in the consolidated balance sheets.

The Company also is exposed to credit losses primarily through its trade accounts receivable. The Company offsets gross trade accounts receivable with an allowance for doubtful accounts. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable and is based upon historical loss trends, the number of days that billings are past due, an evaluation of the potential risk of loss associated with specific accounts, current economic trends and conditions, and reasonable and supportable forecasts of economic conditions. If circumstances relating to specific customers change, or unanticipated changes occur in the general business environment, particularly as it affects auto dealers, the Company’s estimates of the recoverability of receivables could be further adjusted.

Provisions for allowances for doubtful accounts are recognized within general and administrative expense in the consolidated income statements. Amounts are charged against the allowance after all means of collection have been exhausted, the potential for recovery is considered remote and when it is determined that expected credit losses may occur. The Company does not have any off‑balance sheet credit exposure related to its customers. Unbilled accounts receivable generally relate to services rendered in the current period, but not invoiced until the subsequent period.

As of December 31, 2022 and 2021, changes in the Company’s allowance for doubtful accounts are as follows:


	Balance at Beginning of Period		Provision		Write–offs, net of recoveries			Balance at End of Period
Year ended December 31, 2022	$	420	$	1,769	$	(380	)	$	1,809
Year ended December 31, 2021		616		999		(1,195	)		420

As of December 31, 2022 and 2021, $7,150 and $7,356, respectively was included in net accounts receivable, representing unbilled accounts receivable relating primarily to advertising customers invoiced in the period subsequent to services rendered.

Inventory

The Company’s inventory consists of inventory acquired through IMCO transactions, at other marketplaces, or in certain situations across all transactions, during arbitrations. The inventory is recognized in the consolidated balance sheets and is valued at the lower of cost or net realizable value. Cost is determined based on specific identification. In recording inventory at the lower of cost or net realizable value, the Company estimates potential future losses on inventory on hand based on historical losses and market trends. Estimated potential future losses on inventory may vary from actual results which could lead to material adjustments to the financial statements.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization using the straight‑line method over the estimated useful lives of the assets. Leasehold improvements and right-of-use assets are amortized over the lease term, or the estimated useful life of the related asset, if shorter. The estimated useful lives of the Company’s property and equipment are as follows:


		Estimated Useful Life (In Years)
Capitalized equipment		3
Capitalized internal-use software		3
Capitalized website development		3
Furniture and fixtures		3 to 5
Right-of-use assets		Lease term, or asset life if shorter
Leasehold improvements		Lease term, or asset life if shorter

Expenditures for repairs and maintenance are charged to expense as incurred, whereas major betterments are capitalized as additions to property and equipment.

Impairment of Long‑Lived Assets

The Company evaluates the recoverability of long‑lived assets, such as property and equipment and intangible assets, for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. During this review, the Company re‑evaluates the significant assumptions used in determining the original cost and estimated lives of long‑lived assets. Although the assumptions may vary from asset to asset, they generally include operating results, changes in the use of the asset, cash flows, and other indicators of value. Management then determines whether the remaining useful life continues to be appropriate, or whether there has been an impairment of long‑lived assets based primarily upon whether expected future undiscounted cash flows are sufficient to support the assets’ recovery. Recoverability of these assets is measured by comparison of the carrying amount of the asset to the future undiscounted cash flows the asset is expected to generate. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset.

For the year ended December 31, 2022, the Company wrote off $165 of Digital Wholesale segment capitalized website development costs within wholesale cost of revenue in the consolidated income statements related to certain developed technology in which the Company has decided to cease investment. For the year ended December 31, 2021, the Company wrote off $2,481 of U.S. Marketplace segment capitalized website development costs within operating expense in the consolidated income statements and $647 of U.S. Marketplace segment intangible assets within marketplace cost of revenue in the consolidated income statements related to certain developed technology in which the Company has decided to cease investment. For the year ended December 31, 2020, the Company wrote off $1,151 of capitalized website development costs, which are included in the Other category of segment reporting, of which $844 related to the exit of certain international markets in connection with the cost-savings initiative by the Company during the second quarter of 2020 (the "Expense Reduction Plan").

Capitalized Website Development and Capitalized Internal-Use Software Costs

The Company capitalizes certain costs associated with the development of its websites and internal‑use software after the preliminary project stage is complete and until the website development or software is ready for its intended use. Research and development costs incurred during the preliminary project stage or costs incurred for data conversion activities, training, maintenance, and general and administrative or overhead costs are expensed as incurred. Capitalization begins when the preliminary project stage is complete, management authorizes and commits to the funding of the project with the required authority, it is probable the project will be completed, the website development or software will be used to perform the functions intended and certain functional and quality standards have been met. Qualified costs incurred during the operating stage of its website development or software relating to upgrades and enhancements are capitalized to the extent it is probable that they will result in added functionality, while costs that cannot be separated between maintenance of, and minor upgrades and enhancements to, websites and internal‑use software are expensed as incurred. Capitalized website development and capitalized internal-use software costs are recognized within property and equipment, net in the consolidated balance sheets.

Capitalized website development and capitalized internal-use software costs are amortized on a straight‑line basis over their estimated useful life of three years beginning with the time when the product is ready for intended use. Amortization expenses related to capitalized website development costs are recognized within cost of revenue in the consolidated income statements. Amortization expenses related to capitalized internal-use software costs are recognized within the operating expense caption for depreciation and amortization in the consolidated income statements. The Company evaluates the useful lives of these assets when each asset is ready for its intended use, and at least annually thereafter to ensure three years remains appropriate. The Company also tests for impairment at least annually and whenever events or changes in circumstances occur that could impact the recoverability of these assets. Impairment is evaluated as discussed in the “Impairment of Long-lived Assets” section above.

During the years ended December 31, 2022 and 2021, capitalized website development costs were $14,496 and $8,190, respectively. During the years ended December 31, 2022 and 2021, capitalized internal-use software costs were $4,388 and $2,892, respectively.

For the year ended December 31, 2022, 2021, and 2020, amortization expense associated with capitalized website development costs were $7,637, $3,705 and $3,324, respectively. For the year ended December 31, 2022 and 2021, amortization expense associated with capitalized internal-use software costs was $1,286 and $272, respectively. For the year ended December 31, 2020, no amortization expense associated with its capitalized internal-use software costs was recognized.

Capitalized Hosting Arrangements

Capitalized implementation costs for hosting arrangements costs are recognized within prepaid expenses, prepaid income taxes and other current assets and within other non-current assets, as applicable, in the consolidated balance sheets.

Capitalized implementation costs for hosting arrangements are amortized on a straight‑line basis over an estimated useful life of the term of the hosting arrangement, taking into consideration several other factors such as, but not limited to, options to extend the hosting arrangement or options to terminate the hosting arrangement, beginning with the time when the software is ready for intended use. Amortization expenses related to hosting arrangements costs are recognized within the same line item in the consolidated income statements as the expense for fees for the associated hosting arrangement. The Company evaluates the useful lives of these assets when each asset is ready for its intended use, and at least annually thereafter to ensure the selected useful life remains appropriate. The Company also tests for impairment at least annually and whenever events or changes in circumstances occur that could impact the recoverability of these assets. Impairment is evaluated as discussed in the “Impairment of Long-lived Assets” section above.

During the years ended December 31, 2022, 2021, 2020, and 2019, the Company launched separate initiatives designed to enhance its hosting arrangements related to its enterprise applications. During the years ended December 31, 2022 and 2021, capitalized implementation costs were $3,196 and $3,842, respectively, and recognized within other non-current assets and within prepaid expenses, prepaid income taxes and other current assets, respectively, in the consolidated balance sheets.

For the years ended December 31, 2022, 2021, and 2020, amortization expense associated with hosting arrangements was $2,117, $1,761, and $690, respectively, and recognized within operating expense and cost of revenue in the consolidated income statements.

Business Combinations

Valuation of Acquired Assets and Liabilities

The Company measures all consideration transferred in a business combination at its acquisition-date fair value. Consideration transferred is determined by the acquisition-date fair value of assets transferred, liabilities assumed, including contingent consideration obligations, as applicable. The Company measures goodwill as the excess of the consideration transferred over the net of the acquisition-date amounts of assets acquired less liabilities assumed.

The Company makes significant assumptions and estimates in determining the fair value of the acquired assets and liabilities as of the acquisition date, especially the valuation of intangible assets and certain tax positions. The Company records estimates as of the acquisition date and reassess the estimates at each reporting period up to one year after the acquisition date. Changes in estimates made prior to finalization of purchase accounting are recognized within goodwill.

Intangible Assets

Intangible assets are recognized at their estimated fair value at the date of acquisition. Fair value is determined based on inputs and assumptions such as discount rates, rates of return on assets, and long-term sales growth rates.

The Company amortizes intangible assets over their estimated useful lives on a straight-line basis. Useful lives are established based on analysis of all pertinent factors such as: the expected use of the asset, expected useful lives of related assets, provisions that may limit the useful life, historical experience with similar arrangements, effects of economic factors, demand, competition, obsolescence, and maintenance required to maintain the future cash flows. Amortization is recognized over the relevant estimated useful lives ranging from three to eleven years.

The Company evaluates the useful lives of these assets as of the acquisition date and at least annually thereafter to ensure the selected useful life remains appropriate. If the estimate of an intangible asset’s remaining useful life is changed, the Company amortizes the remaining carrying value of the intangible asset prospectively over the revised remaining useful life.

The Company monitors its long-lived assets for impairment indicators on an ongoing basis in accordance with GAAP, and tests for impairment at least annually and whenever events or changes in circumstances occur that could impact the recoverability of these assets. If impairment indicators exist, the Company performs the required impairment analysis by comparing the undiscounted cash flows expected to be generated from the long-lived assets to the related net book values. Impairment is evaluated as discussed in the “Impairment of Long-Lived Assets” section above.

Goodwill

Goodwill is recognized when consideration paid in a purchase acquisition exceeds the fair value of the net assets acquired. Goodwill is not amortized, but rather is tested for impairment annually or more frequently if facts and circumstances warrant a review. Conditions that could trigger a more frequent impairment assessment include, but are not limited to, a significant adverse change in certain agreements, significant underperformance relative to historical or projected future operating results, an economic downturn affecting automotive marketplaces, increased competition, a significant reduction in the Company's stock price for a sustained period or a reduction of its market capitalization relative to net book value.

The Company evaluates impairment annually on October 1 by comparing the estimated fair value of each reporting unit to its carrying value. For the first three quarters of fiscal year 2022, the Company determined that it had two reporting units: Marketplace and CarOffer. The Company elected to bypass the optional qualitative test for impairment and proceed to Step 1, which is a quantitative impairment test. The Company estimates fair value using a market approach, based on market multiples derived from public companies that are identified as peers. As of October 1, 2022, the Company estimated forecasted revenue and gross margin for fiscal year 2022, and estimated revenue and gross margin market multiples using publicly available information for each of its reporting units. Developing these assumptions required the use of judgment and estimates. Actual results may differ from these forecasts.

Subsequent to the Company’s evaluation of impairment on October 1, 2022, the Company revised its reporting units from two reporting units, Marketplace and CarOffer, to four reporting units, U.S. Marketplace, Digital Wholesale, United Kingdom Marketplace and Canada Marketplace. Because of the change in reporting units, the Company performed an additional goodwill impairment evaluation as of December 31. A consistent methodology was utilized, calculating the fair value of the reporting units using the market approach described previously. Revenue and gross margin actuals were utilized for the year ended December 31, 2022, and estimated revenue and gross margin market multiples were utilized based upon publicly available information for each of the reporting units. Developing these assumptions required the use of judgment and estimates. Actual results may differ from these forecasts.

For the years ended December 31, 2022, 2021, and 2020 the Company did not identify any impairment of its goodwill.

Redeemable Noncontrolling Interest

In connection with the Company’s acquisition of a 51% interest in CarOffer on January 14, 2021, the Company became a party with the noncontrolling equity holders of CarOffer to the CarOffer Operating Agreement (as defined in "Stock-Based Compensation" below), which, among other matters, sets forth certain put and call rights described in "Stock-Based Compensation" below. The CarOffer Operating Agreement provides the Company with the right to purchase, and the noncontrolling equity holders with the right to sell to the Company, the noncontrolling CarOffer equity holders’ equity interests in CarOffer at a contractually defined formulaic purchase price, which is based on a multiple of earnings. As the purchase is contingently redeemable at the option of the noncontrolling equity holders, the Company classifies the carrying amount of the redeemable noncontrolling interests within the mezzanine section in the consolidated balance sheet, which is presented above the equity section and below the liabilities section. As of the date of Closing (as defined in "Stock-Based Compensation" below), the noncontrolling interest was recognized at fair value computed using the Least Square Monte Carlo Simulation approach. Significant inputs to the model included market price of risk, volatility, correlation and risk-free rate.

Subsequent to the Company’s acquisition of the 51% interest on January 14, 2021, the redeemable noncontrolling interest is measured at the greater of the amount that would be paid if settlement occurred as of the balance sheet date based on the contractually defined redemption value and its carrying amount adjusted for net income (loss) attributable to the noncontrolling interest and tax distributions to redeemable noncontrolling interest holders. Adjustments to the carrying value of the redeemable noncontrolling interest resulting from changes in the redemption value are recognized within retained earnings in the consolidated balance sheets.

Leases

The Company recognizes a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying assets for the lease term. The Company reviews all material contracts for embedded leases to determine if they have a right-of-use asset. The Company made an accounting policy election to apply the practical expedient under ASC Topic 842, Leases, to not separate lease components from non-lease components for all leases.

The Company recognizes rent expense on a straight-line basis over the lease period. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The Company allocates lease costs across all departments based on headcount in the respective location.

Variable lease payments that depend on an index or a rate are included in the lease payments and are measured using the prevailing index or rate at the measurement date. Variable lease payments not based on an index or a rate are excluded from lease payments and are expensed as incurred.

The Company made an accounting policy election to not recognize a lease liability or right-of-use asset on its consolidated balance sheet for leases with an initial term of twelve months or less, and instead to recognize lease payments in the consolidated income statement on a straight-line basis over the lease term and variable lease payments that do not depend on an index or rate as expense in the period in which the achievement of the specified target that triggers the variable lease payments to become probable.

The Company recognizes sublease income on a straight-line basis over the sublease period. The Company recognizes sublease income as an offset to rent expense within operating expenses in the consolidated income statements as subleasing is not a primary business activity of the Company and is meant to offset occupancy costs. For the year ended December 31, 2022, the Company recognized sublease income of $1,809. For the year ended December 31, 2021, there was no sublease income. For the year ended December 31, 2020, the Company recognized sublease income within other (expense) income, net in the consolidated income statements for an immaterial amount.

Contingent Liabilities

The Company has certain contingent liabilities that arise in the ordinary course of business activities. The Company accrues for loss contingencies when losses become probable and can be reasonably estimated. If the reasonable estimate of the loss is a range and no amount within the range is a better estimate, the minimum amount of the range is recognized as a liability. The Company does not accrue for contingent losses that, in its judgment, are considered to be reasonably possible, but not probable; however, it discloses the range of such reasonably possible losses, if material.

Income Taxes

The Company is subject to federal and state income taxes in the United States and taxes in foreign jurisdictions in which it operates. For the years ended December 31, 2022 and 2021, a provision for income taxes was recognized as a result of the consolidated taxable income position.

The Company accounts for income taxes in accordance with the asset and liability method. Under this method, deferred tax assets and liabilities are recognized based on temporary differences between the financial reporting and income tax bases of assets and liabilities using enacted tax rates in effect for the year in which the temporary differences are expected to be recovered or settled.

This method requires a valuation allowance against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In performing this analysis, the Company considers future taxable income and ongoing prudent and feasible tax planning strategies to assess realizability. Actual results may differ from these forecasts. Valuation allowances are reassessed periodically to determine whether it is more likely than not that the tax benefits will be realized in the future and if any existing valuation allowance should be released. As of December 31, 2022 and 2021, valuation allowances were immaterial.

The Company accounts for uncertain tax positions by prescribing a more‑likely‑than‑not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company assesses its income tax positions and recognizes an income tax benefit or expense within the provision for income taxes in the consolidated income statements based upon management’s evaluation of the facts, circumstances, and information available at the reporting date. The tax position is measured as the largest amount of benefit or expense that is greater than 50% likely of being realized upon ultimate settlement with the taxing authority during examination. The Company recognizes interest and penalties, if applicable, related to uncertain tax positions as income tax expense within other (expense) income, net in the consolidated income statements. The Company recognizes liabilities related to uncertain tax positions within accrued expenses, accrued income taxes and other current liabilities and other non-current liabilities in the consolidated balance sheets, as applicable depending on if the uncertainty is expected to be resolved within one year or more. The ultimate resolution of these tax positions may be greater or less than the liabilities recognized.

For the year ended December 31, 2022, income tax expense and liability related to uncertain tax positions, exclusive of immaterial interest or penalties related to uncertain tax provisions was $598, which would favorably affect the Company's effective tax rate, if recognized. For the year ended December 31, 2021, no income tax expense or liability related to uncertain tax positions was recognized.

The Tax Cuts and Jobs Act subjects a U.S. shareholder to tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries. An entity can make an accounting policy election, per the FASB Staff Q&A, Topic 740, No. 5, Accounting for Global Intangible Low-Taxed Income (“ASC 740”), either to recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. The Company has elected to account for GILTI as a period cost in the year the tax is incurred.

The US Inflation Reduction Act of 2022 (the "IRA") was passed into law on August 16, 2022. The provisions of the IRA will be effective beginning with fiscal year 2023, with certain exceptions. The IRA has several new provisions including a 15% corporate alternative minimum tax ("CAMT") for certain large corporations that have at least an average of $1.0 billion of adjusted financial statement income over a consecutive three-tax-year period. The IRA also introduced a 1% excise tax imposed on certain stock repurchases by publicly traded U.S. corporations made after December 31, 2022. Based on the Company’s initial evaluation, the Company does not believe the IRA will have a material impact on its income tax provision and cash taxes.

Under the UK Finance Act 2022 that was granted on February 24, 2022, UK corporation tax rate will be increased from 19% to 25% effective April 1, 2023. The Company has evaluated the rate change impact and recognized immaterial deferred tax expense on its UK deferred tax assets and liabilities.

The Company will continue to monitor the changes in tax laws and regulations to evaluate their potential impact on its business.

Fair Value of Financial Instruments

The Company measures eligible assets and liabilities at fair value with changes in value recognized in earnings. Fair value treatment may be elected either upon initial recognition of an eligible asset or liability or, for an existing asset or liability, if an event triggers a new basis of accounting. During the years ended December 31, 2022 and 2021, the Company did not elect to remeasure any of its existing financial assets and did not elect the fair value option for any financial assets transacted.

ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), establishes a three‑level valuation hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances.

ASC 820 identifies fair value as the exchange price, or exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market‑based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The Company uses valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows:

Level 1 — Quoted unadjusted prices for identical instruments in active markets.

Level 2 — Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model‑derived valuations in which all observable inputs and significant value drivers are observable in active markets.

Level 3 — Model‑derived valuations in which one or more significant inputs or significant value drivers are unobservable, including assumptions developed by the Company.

The Company has evaluated the estimated fair value of financial instruments using available market information. The use of different market assumptions, estimation methodologies, or both, could have a significant effect on the estimated fair value amounts.

As of December 31, 2022 and 2021, the carrying amounts of the Company’s financial instruments, which include cash and cash equivalents, investments, accounts receivable, accounts payable, and accrued expenses approximated their fair values due to the short‑term nature of these instruments.

Debt

The Company may obtain access to capital via credit facilities. The amount of borrowings outstanding on credit facilities are recognized within other current liabilities or other non-current liabilities in the consolidated balance sheets, depending on the borrowing base. Costs for unutilized revolving commitments and interest for outstanding borrowings are recognized as interest expense within other (expense) income, net in the consolidated income statements. Interest payments are recognized within operating activities in the consolidated statement of cash flows, and repayments of principle amounts are recognized within financing activities in the consolidated statement of cash flows.

As of December 31, 2022, there were no borrowings and no letters of credit outstanding under the 2022 Revolver (as defined in Note 7 to these consolidated financial statements).

As of December 31, 2022, commitment fees under the 2022 Revolver were immaterial (as defined in Note 7 to these consolidated financial statements).

Deferred Financing Costs

The Company capitalizes certain legal and other third-party fees that are directly associated with obtaining access to capital via credit facilities. Deferred financing costs incurred in connection with obtaining access to capital are recognized within other non-current assets in the consolidated balance sheets and within financing activities in the consolidated statement of cash flows. These costs are amortized on a straight-line basis over the term of the applicable credit facility and recognized as interest expense within other (expense) income, net in the consolidated income statements and as an adjustment to consolidated net income in the consolidated statement of cash flows.

As of December 31, 2022, deferred financing costs were $2,442. As of December 31, 2021, no deferred financing costs were recognized.

For the year ended December 31, 2022, amortization expense associated with deferred financing costs was $136. For the year ended December 31, 2021 and 2020, no amortization expense associated with deferred financing costs was recognized.

Foreign Currency Translation

The reporting currency of the Company is the U.S. dollar. The functional currency of the Company’s foreign subsidiaries is the local currency of each subsidiary. All assets and liabilities in the balance sheets of entities whose functional currency is a currency other than the U.S. dollar are translated into U.S. dollar equivalents at exchange rates as follows: (i) asset and liability accounts at period‑end rates; (ii) income statement accounts at weighted‑average exchange rates for the period; and (iii) stockholders’ equity accounts at historical exchange rates. The resulting translation adjustments are excluded from consolidated net income and are recognized within accumulated other comprehensive (loss) income in the consolidated balance sheets.

Foreign currency transaction gains and losses are included in consolidated net income for the period. The Company's foreign subsidiaries have intercompany transactions that are eliminated upon consolidation, and these transactions expose the Company to foreign currency exchange rate fluctuations. Exchange rate fluctuations on short‑term intercompany transactions are recognized in other (expense) income, net in the consolidated income statements. Exchange rate fluctuations on long-term intercompany transactions are recognized within accumulated other comprehensive loss in the consolidated balance sheets.

Revenue Recognition

Sources of Revenue

The Company derives its revenue from marketplace revenue, wholesale revenue, and product revenue. Marketplace revenue is included in the U.S. Marketplace segment and Other category of segment reporting. Wholesale revenue and product revenue are included in the Digital Wholesale segment. The Company generates marketplace revenue primarily from (i) dealer subscriptions to the Company's Listings packages, Real-time Performance Marketing, or RPM, digital advertising suite, and Digital Retail, (ii) advertising revenue from auto manufacturers and other auto‑related brand advertisers, and (iii) revenue from partnerships with financing services companies. The Company generates wholesale revenue primarily from (i) transaction fees earned from facilitating the purchase and sale of vehicles between dealers, or Dealer-to-Dealer transactions, (ii) transaction fees earned from sale of vehicles to dealers that it acquires at other marketplaces, and (iii) transaction fees earned from performing inspection and transportation services, inclusive of Dealer-to-Dealer transactions, other marketplace to dealer transactions, and IMCO transactions (as defined below). The Company generates product revenue primarily from (i) aggregate proceeds received from the sale of vehicles to dealers that were acquired directly from customers, or CarGurus Instant Max Cash Offer, or IMCO transactions, and (ii) proceeds received from the sale of vehicles that were acquired through arbitration.

Revenue Recognition

ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"), outlines a comprehensive five-step revenue recognition model based on the principle that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, the Company applies the following five steps:

1) Identify the contract with a customer

2) Identify the performance obligations in the contract

3) Determine the transaction price

4) Allocate the transaction price to performance obligations in the contract

5) Recognize revenue when or as the Company satisfies a performance obligation

Marketplace Revenue - Description

The Company offers multiple types of marketplace Listings packages to its dealers for its CarGurus U.S. platform (availability varies on the Company's other marketplaces): Restricted Listings, which is free; and various levels of Listings packages, which each require a paid subscription under a monthly, quarterly, semiannual, or annual subscription basis.

The Company’s subscriptions for customers generally auto-renew on a monthly basis and are cancellable by dealers with 30 days’ advance notice prior to the commencement of the applicable renewal term. Subscription pricing is determined based on a dealer’s inventory size, region, and the Company's assessment of the connections and return on investment ("ROI") the platform will provide them and is subject to discounts and/or fee reductions that the Company may offer from time to time. The Company also offers all dealers on the platform access to its Dealer Dashboard, which includes a performance summary, Dealer Insights tool, and user review management platform. Only dealers subscribing to a paid Listings package have access to the Pricing Tool, Market Analysis tool and IMV Scan tool.

The Company offers paid Listings packages for the Autolist and PistonHeads websites.

In addition to displaying inventory in the Company's marketplace and providing access to the Dealer Dashboard, the Company offers dealers subscribing to certain of its Listings packages other subscription advertising and customer acquisition products and enhancements marketed under the Company's RPM digital advertising suite. Through RPM, dealers can buy advertising that appears in the Company's marketplace, on other sites on the internet, and/or on high-converting social media platforms. Such advertisements can be targeted by the user’s geography, search history, CarGurus website activity and a number of other targeting factors, allowing dealers to increase their visibility with in-market consumers and drive qualified traffic for dealers.

The Company also offers dealer advertising products for the PistonHeads website.

The Company also offers dealers subscribing to certain of its Listings packages other subscription advertising and customer acquisition products and enhancements such as Digital Retail, which allows shoppers to complete much of the vehicle-purchase process online through the Dealers’ Listings page. Digital Retail is comprised of (i) the Digital Deal Platform, which gives dealers higher quality leads through upfront consumer-provided information, (ii) Area Boost/Geo Expansion, which expands the visibility of a dealer’s inventory in the search results beyond its local market, and (iii) Hard Pull Financing, which provides loan information.

Marketplace revenue also consists of non-dealer advertising revenue from auto manufacturers and other auto-related brand advertisers sold on a cost per thousand impressions, or CPM basis. An impression is an advertisement loaded on a web page. In addition to advertising sold on a CPM basis, the Company also has advertising sold on a cost per click basis, or CPC basis. Pricing is primarily based on advertisement size and position on the Company’s websites and mobile applications. Auto manufacturers and other brand advertisers can execute advertising campaigns that are targeted across a wide variety of parameters, including demographic groups, behavioral characteristics, specific auto brands, categories such as Certified Pre-Owned, and segments such as hybrid vehicles. The Company does not provide minimum impression guarantees or other types of minimum guarantees in its contracts with customers. Advertising is also sold indirectly through revenue sharing arrangements with advertising exchange partners.

The Company also offers non-dealer advertising products for the Autolist and PistonHeads websites.

Marketplace revenue also includes revenue from partnerships with certain financing services companies pursuant to which the Company enables eligible consumers on the Company's CarGurus U.S. website to pre-qualify for financing on cars from dealerships that offer financing through such companies. The Company primarily generates revenue from these partnerships based on the number of funded loans from consumers who pre-qualify with its lending partners through its site.

Marketplace Revenue - Revenue Recognition

For Listings, Digital Retail, and RPM, the Company provides a single similar service each day for a period of time. Each time increment (i.e., one day), rather than the underlying activities, is distinct and substantially the same and therefore the performance obligation of the Company is to provide a series of daily activities over the contract term. Similar to the dealer listings, the dealer advertising is considered a promise to provide a single similar service each day. Each time increment is distinct and substantially the same and therefore the performance obligation of the Company is to provide a series of daily activities over the contract term.

Total consideration for marketplace revenue is stated within the contracts. There are no contractual cash refund rights, but credits may be issued to a customer at the sole discretion of the Company. Dealer customers do not have the right to take possession of the Company’s software. At the portfolio level, there is also variable consideration that needs to be included in the transaction price. Variable consideration consists of sales allowances, usage fees, and concessions that change the transaction price of the unsatisfied or partially unsatisfied performance obligation. The Company recognizes that there are times when there is a customer satisfaction issue or other circumstances that will lead to a credit. Due to the known possibility of future credits, a monthly sales allowance review is performed to defer revenue at a portfolio level for such future adjustments in the period of incurrence. The Company establishes sales allowances at the time of revenue recognition based on its history of adjustments and credits provided to its customers. In assessing the adequacy of the sales allowance, the Company evaluates its history of adjustments and credits made through the date of the issuance of the financial statements. Estimated sales adjustments, credits and losses may vary from actual results which could lead to material adjustments to the financial statements. Sales allowances are recognized as a reduction to revenue in the consolidated income statements.

Performance obligations are satisfied over time as the customer simultaneously receives and consumes the benefit of the service. Revenue is recognized ratably over the subscription period beginning on the date the Company starts providing services to the customer under the contract. Revenue is presented net of any taxes collected from customers. Customers are billed in advance on the first day of each calendar month with payment terms generally thirty to sixty days from the date invoiced. Billings are recognized as accounts receivable or short-term deferred revenue when payment is received in advance of services being delivered to the customers.

For non-dealer advertising revenue from auto manufacturers and other auto-related brand advertisers, the performance obligation is to publish the agreed upon campaign on the Company’s websites and load the related impressions.

Advertising contracts state the transaction price within the agreement with payment generally being based on the number of clicks or impressions delivered on the Company’s websites. Total consideration is based on output and deemed variable consideration constrained by an agreed upon delivery schedule and is allocated to the period in which the service was rendered. Additionally, there are generally no contractual cash refund rights. Certain contracts do contain the right for credits in situations in which impressions are not displayed in compliance with contractual specifications. At an individual contract level, the Company may give a credit for a customer satisfaction issue or other circumstance. Due to the known possibility of future credits, a monthly review is performed to defer revenue at an individual contract level for such future adjustments in the period of incurrence. Although these credits have not been material and have not changed significantly over the historical period, estimated sales adjustments credits and losses may vary from actual results which could lead to material adjustments to the financial statements.

Performance obligations for company-sold advertising revenue and partner-sold advertising revenue are satisfied over time as impressions are delivered. Revenue is recognized based on the total number of impressions delivered within the specified period. Revenue from advertising sold directly by the Company is recognized based on the gross amount charged to the advertiser because the Company is the principal in the arrangement as it controls the ad placement and timing of the campaign, establishes the selling price and is directly responsible for the fulfillment of the contractual terms including any remedy for issues with such fulfillment. Revenue from advertising sold by partners is recognized based on the net amount of revenue received from the content partners because the Company is the agent in the arrangement as the advertising partner is responsible for fulfillment, including the acceptability of the services delivered. In partner-sold advertising arrangements, the advertising partner has a direct contractual relationship with the advertiser. There is no contractual relationship between the Company and the advertiser for partner-sold transactions. Additionally, for auction-based partner agreements, the Company has latitude in establishing the floor price, but the final price established by the exchange server is at market rates. Revenue is presented net of any taxes collected from customers. Customers are billed monthly in arrears with payment terms generally thirty to sixty days from the date invoiced. Unbilled accounts receivable generally relate to services rendered in the current period, but not invoiced until the subsequent period.

Other marketplace revenue includes revenue from contracts for which the performance obligation is a series of distinct services with the same level of effort daily. For these contracts, primarily related to the Company’s partnerships with financing services companies, the Company estimates the value of the variable consideration in determining the transaction price and allocates it to the performance obligation. Revenue is estimated and recognized on a ratable basis over the contractual term. The Company reassesses the estimate of variable consideration at each reporting period.

Wholesale Revenue - Description

The Buying Matrix on the CarOffer platform enables buying dealers to create standing buy orders and provides instant offers to selling dealers. Wholesale revenue includes transaction fees earned from Dealer-to-Dealer transactions, where the Company collects fees from both the buying and selling dealers. The Company also sells vehicles to dealers that it acquires at other marketplaces, where it collects a transaction fee from the buying dealers.

Wholesale revenue also includes fees earned from performing inspection and transportation services, where it collects fees from the buying dealer. Inspection and transportation service revenue is inclusive of Dealer-to-Dealer transactions, other marketplace to dealer transactions, and IMCO transactions.

Wholesale revenue also includes fees earned from certain guarantees offered to dealers (which include 45-Day Guarantee and OfferGuard products), where the Company collects fees from the buying dealer or selling dealer, as applicable. Guarantee revenue is not accounted for under ASC 606 and is accounted for under ASC 460 as discussed further in Note 2 of these consolidated financial statements.

Wholesale Revenue - Revenue Recognition

When facilitating Dealer-to-Dealer transactions and for vehicles sold to dealers that are acquired at other marketplaces, the Company does not control the vehicle and therefore acts as an agent in the transaction. Revenue earned from the fees for facilitating these transactions is recognized at a point in time when the vehicle is sold on a net basis.

For inspection and transportation services, the Company leverages a network of third-party inspection service providers and transportation carriers. The Company controls both inspection and transportation services as it is primarily responsible for fulfillment and therefore acts as a principal in the transaction. Revenue from fees for inspection services is recognized at the point in time when the inspection is performed and revenue from fees for transportation services is recognized over time as delivery is completed. Revenue from both inspection and transportation services is recognized on a gross basis. Unearned revenue related to unsatisfied performance obligations is recognized as deferred revenue.

Wholesale revenue also includes arbitration in which the vehicle is rematched to a new buyer and not acquired by the Company. Arbitration is the process by which the Company investigates and resolves claims from buying dealers. In these situations, the Company does not control the vehicle and therefore acts as an agent in the transaction.

Within wholesale transactions, there are typically no contractual cash refund rights, but credits may be issued to a customer at the sole discretion of the Company and refunds may be required by law in the case of a vehicle defect. At the portfolio level, there is also variable consideration that needs to be included in the transaction price. Variable consideration consists of sales allowances and concessions that change the transaction price of the unsatisfied or partially unsatisfied performance obligation. The Company recognizes that there are times when there is a customer satisfaction issue or other circumstance that will lead to a credit or arbitration. The Company establishes sales allowances at the time of revenue recognition based on its history of adjustments and credits provided to its customers. In assessing the adequacy of the sales allowance, the Company evaluates its history of adjustments and credits made through the date of the issuance of the financial statements. Upon recognizing a sales transaction, the Company estimates the amount of transaction price that will be reversed in a subsequent period and records a reserve for returns and cancellations in other current liabilities in the consolidated income statements. Estimated sales adjustments, credits and losses may vary from actual results which could lead to material adjustments to the financial statements. Sales allowances are recognized as a reduction to revenue in the consolidated income statements and an increase to other current assets and other current liabilities in the consolidated balance sheet. Wholesale revenue is also offset by concessions.

Wholesale revenue is presented net of any taxes collected from customers.

Product Revenue - Description

The Buying Matrix on the CarOffer platform enables consumers who are selling vehicles to be instantly presented with an offer. Product revenue includes the aggregate proceeds received from the sale of vehicles through IMCO transactions, including vehicle sale price and transaction fees collected from the buying dealers. Product revenue also includes proceeds received from the sale of vehicles acquired through arbitration, including vehicle sale price and transaction fees collected from buying dealers. Arbitration is the process by which the Company investigates and resolves claims from buying dealers. The Company controls the vehicle in these transactions and therefore acts as the principal.

Product - Revenue Recognition

For vehicles sold to dealers that are acquired through IMCO transactions, the Company controls the vehicle and therefore acts as a principal in the transaction. Revenue earned from proceeds received on the sale of vehicles through IMCO transactions, including vehicle sale price and transaction fees collected from the buying dealers, is recognized at a point in time when the vehicle is sold on a gross basis.

In certain situations across all transactions, during an arbitration process, the Company acquires vehicles in transactions in which it controls the vehicle and therefore acts as a principal in the transaction. Revenue earned from the sale of the vehicle in these transactions is recognized at a point in time on a gross basis.

Within product transactions, there are typically no contractual cash refund rights, but credits may be issued to a customer at the sole discretion of the Company. At the portfolio level, there is also variable consideration that needs to be included in the transaction price. Variable consideration consists of sales allowances and concessions that change the transaction price of the unsatisfied or partially unsatisfied performance obligation. The Company recognizes that there are times when there is a customer satisfaction issue or other circumstance that will lead to a credit or arbitration. The Company establishes sales allowances at the time of revenue recognition based on its history of adjustments and credits provided to its customers. In assessing the adequacy of the sales allowance, the Company evaluates its history of adjustments and credits made through the date of the issuance of the financial statements. Upon recognizing a sales transaction, the Company estimates the amount of transaction price that will be reversed in a subsequent period and records a reserve for returns and cancellations in other current liabilities in the consolidated income statements. Estimated sales adjustments, credits and losses may vary from actual results which could lead to material adjustments to the financial statements. Sales allowances are recognized as a reduction to revenue and cost of revenue in the consolidated income statements and an increase to other current assets and other current liabilities in the consolidated balance sheet. Product revenue is also offset by concessions.

Product revenue presented net of any taxes collected from customers.

Contracts with Multiple Performance Obligations

The Company periodically enters into arrangements that include Listings and/or dealer advertising product subscriptions within marketplace revenue. These contracts include multiple promises that the Company evaluates to determine if the promises are separate performance obligations. Performance obligations are identified based on services to be transferred to a customer that are distinct within the context of the contractual terms. Once the performance obligations have been identified, the Company determines the transaction price, which includes estimating the amount of variable consideration to be included in the transaction price, if any. If required, the transaction price is allocated to each performance obligation in the contract based on a relative standalone selling price method as the performance obligation is being satisfied. For the Company’s arrangements that include Listings and/or dealer advertising product subscriptions, the performance obligations were satisfied over a consistent period of time and therefore the allocations did not impact the revenue recognized.

For wholesale and product arrangements that include multiple performance obligations, the Company allocates revenue based on fair value. Vehicle and inspection revenues are recognized at a point in time and transportation revenue is recognized over time.

Costs to Obtain a Contract

Commissions paid to sales representatives and payroll taxes are considered costs to obtain a contract. Under ASC 606, the costs to obtain a contract require capitalization and amortization of those costs over the period of benefit. Although the guidance specifies the accounting for an individual contract with a customer, as a practical expedient, the Company has opted to apply the guidance to a portfolio of contracts with similar characteristics. The Company has opted to apply another practical expedient to immediately expense the incremental cost of obtaining a contract when the underlying related asset would have been amortized over one year or less. As such, the Company applied this practical expedient to advertising contracts and wholesale and product transactions as the term is one year or less and these contracts do not renew automatically. The practical expedient is not applicable to marketplace subscription contracts as the period of benefit including renewals is anticipated to be greater than one year. The assets are periodically assessed for impairment.

For marketplace subscription customers, the commissions paid on contracts with new customers, in addition to any commission amount related to incremental sales, are capitalized and amortized over the estimated benefit period of the customer relationship taking into account factors such as peer estimates of technology lives and customer lives as well as the Company's own historical data. Commissions paid that are not directly related to obtaining a new contract are expensed as incurred.

Additionally, the Company allocates employer payroll tax expense to the commission expense in proportion to the overall payroll taxes paid during the respective period. As such, capitalized payroll taxes are amortized in the same manner as the underlying capitalized commissions.

As of December 31, 2022 and 2021, assets associated with costs to obtain a contract were $17,394 and $14,912, respectively. For the years ended December 31, 2022, 2021, and 2020, amortization expense associated with costs to obtain a contract was $11,067, $12,653 and $11,605, respectively.

Deferred Revenue

Deferred revenue primarily consists of payments received in advance of revenue recognition from the Company’s marketplace revenue and is recognized as the revenue recognition criteria are met. The Company generally invoices its customers monthly. Accordingly, the deferred revenue balances do not represent the total contract value of annual or multiyear subscription agreements. Deferred revenue that is expected to be recognized during the succeeding 12‑month period is recognized as current deferred revenue and the remaining portion is recognized as noncurrent in the consolidated balance sheets. All deferred revenue was recognized as current for all periods presented.

Marketplace Cost of Revenue

Marketplace cost of revenue includes expenses related to supporting and hosting marketplace service offerings. These expenses include personnel and related expenses for the Company's customer support team, including salaries, benefits, incentive compensation, and stock-based compensation; third-party service provider expenses such as advertising, data center and networking expenses; amortization of developed technology; amortization of capitalized website development; amortization of hosting arrangements; and allocated overhead expenses. The Company allocates overhead expenses, such as rent and facility expenses, information technology expense, and employee benefit expense, to all departments based on headcount. As such, general overhead expenses are reflected in cost of revenue and each operating expense category.

Wholesale Cost of Revenue

Wholesale cost of revenue includes expenses related to supporting and hosting wholesale service offerings, including Dealer-to-Dealer transactions and vehicles sold to dealers acquired at other marketplaces, on the Buying Matrix on the CarOffer platform. These expenses include vehicle transportation and inspection expenses; net losses on vehicles related to guarantees offered to dealers through Dealer-to-Dealer transactions; personnel and related expenses for employees directly involved in the fulfillment and support of transactions, including salaries, benefits, incentive compensation and stock-based compensation; third-party service provider expenses; amortization of developed technology; amortization of capitalized website development; and allocated overhead expenses. The Company allocates overhead expenses, such as rent and facility expenses, information technology expense, and employee benefit expense, to all departments based on headcount. As such, general overhead expenses are reflected in cost of revenue and each operating expense category.

Product Cost of Revenue

Product cost of revenue includes expenses related to vehicles sold to dealers through IMCO transactions and vehicles sold to dealers acquired through arbitration. These costs include the cost of the vehicle and transportation expenses.

Guarantees and Indemnification Obligations

In the ordinary course of business, the Company enters into agreements with its customers, partners and service providers that include commercial provisions with respect to licensing, infringement, guarantees, indemnification, and other common provisions.

The Company provides certain guarantees to dealers through products such as its 45-Day Guarantee and OfferGuard service offerings on the CarOffer platform, which are accounted for under ASC Topic 460, Guarantees.

45-Day Guarantee is an arrangement through which a selling dealer lists a car on the CarOffer platform, and the Company provides an offer to purchase the vehicle listed at a specified price at any time over a 45-day period. This provides the seller with a put option, where they have the right, but not the obligation, to require the Company to purchase the vehicle during this window. OfferGuard is an arrangement through which a buying dealer purchases a car on the CarOffer platform, and the Company provides an offer to purchase the vehicle at a specified price between days 1 and 3, and days 42 and 45 if the dealer is not able to sell the vehicle after 42 days.

A guarantee liability is initially measured using the amount of consideration received from the dealer for the purchase of the guarantee. The initial liability is released, and guarantee income is recognized, upon the earliest of the following: the vehicle sells during the guarantee period, the seller exercises it’s put option during the guarantee period, or the option expires unexercised at the end of the guarantee period. Guarantee income is recognized within wholesale revenue in the consolidated income statements. When it is probable and reasonably estimable that the Company will incur a loss on a vehicle that it is required to purchase, a liability, and a corresponding charge to wholesale cost of revenue is recognized for the amount of the loss in the consolidated balance sheets and the consolidated income statements. Gains and losses resulting from the dealers exercise of guarantees are recognized within wholesale cost of revenue, as appropriate, in the consolidated income statements.

For the years ended December 31, 2022 and 2021, income for guarantees purchased by dealers was $10,026 and $5,537, respectively. For the year ended December 31, 2022, the loss, net of gains recognized within cost of revenue in the consolidated income statements resulting from the dealer's exercise of guarantees was $4,568. For the year ended December 31, 2021, the net loss resulting from the dealer's exercise of guarantees was immaterial.

As of December 31, 2022, the maximum potential amount of future payments that the Company could be required to make under these guarantees was $31,056. Of the maximum potential amount of future payments, the losses that are probable are not material. As such, as of December 31, 2022, the Company had no material contingent loss liabilities.

As of December 31, 2021, the maximum potential amount of future payments that the Company could be required to make under these guarantees was $76,075. Of the maximum potential amount of future payments, none were considered probable. The exercise of guarantees has historically been infrequent and even when such exercises did occur, the losses were immaterial. As such, as of December 31, 2021, the Company had no contingent loss liabilities.

As of December 31, 2020, the Company did not have any guarantees.

Stock‑Based Compensation

For stock‑based awards granted under the Company’s stock‑based compensation plans, the fair value of each award is determined on the date of grant.

For restricted stock units (“RSUs”) granted subject to service-based vesting conditions, the fair value is determined on the date of grant using the closing price of the Company’s Class A common stock, par value $0.001 per share (the “Class A common stock”), as reported on the Nasdaq Global Select Market. RSUs granted subject to service-based vesting conditions generally vest over a four-year requisite service period.

For RSUs granted subject to market-based vesting conditions, the fair value is determined on the date of grant using the Monte Carlo simulation lattice model. The determination of the fair value using this model is affected by the Company’s stock price performance relative to the companies listed on the S&P 500 as of December 31, 2021 and 2020 and a number of assumptions including volatility, correlation coefficient, risk-free interest rate and expected dividends. RSUs granted subject to market-based vesting conditions vest upon achievement of specified levels of market conditions. During the year ended December 31, 2022, the Company modified its market-based performance awards to contain only service-based vesting conditions in line with the Company's other restricted stock unit awards. As a result, there are no market-based RSUs outstanding as of December 31, 2022.

For stock options granted, the fair value is determined on the date of grant using the Black‑Scholes option‑pricing model. The determination of the fair value is affected by the Company’s stock price and a number of assumptions including expected dividend yield, expected volatility, risk-free interest rate and expected term. For expected volatility, the Company uses a blended volatility to combine the historical volatility of trading with the volatility for a peer group of companies as the Company does not have historical stock prices for a period that is at least equal to the expected term. Stock options granted generally have a term of ten years from the date of grant and generally vest over a four-year requisite service period.

The weighted average assumptions utilized to determine the fair value of options granted during the year ended December 31, 2022 and 2021 are as follows:


	Year Ended December 31,
	2022			2021
Expected dividend yield		—			—
Expected volatility		48.03	%		50.95	%
Risk–free interest rate		1.47	%		0.69	%
Expected term (in years)	6.11				6.06

During the year ended December 31, 2020, no options were granted.

On January 14, 2021, the Company acquired a 51% interest in CarOffer which provides an automated instant vehicle trade platform and is based in Addison, Texas, pursuant to the terms of a Membership Interest Purchase Agreement (the “Purchase Agreement”) dated as of December 9, 2020 (the “Agreement Date”), as amended, by and among the Company, CarOffer, CarOffer Investors Holding, LLC, a Delaware limited liability company (“TopCo”), each of the Members of TopCo (the “Members”), and Bruce T. Thompson, an individual residing in Texas (the “Members’ Representative”). This acquisition (the “CarOffer Acquisition”) has, and is intended to continue to add wholesale vehicle purchasing and selling capabilities to CarGurus’ portfolio of dealer offerings and create a complete and efficient digital solution for dealers to sell and acquire vehicles at both retail and wholesale.

Upon consummation of the transactions contemplated by the Purchase Agreement (the “Closing”), the Company acquired a 51% interest in CarOffer for an aggregate consideration of $173,155 (the “Total Consideration”), such Total Consideration consisting of (a) shares of Class A common stock in the aggregate amount of $103,645 (the “Stock Consideration”) and (b) $69,510 in cash (the “Cash Consideration”). The number of shares of Class A common stock issued following the Closing in connection with the Stock Consideration was 3,115,282, which was calculated by reference to a value of $22.51 per share, which equals the volume-weighted average closing price per share of Class A common stock on the Nasdaq Stock Market for the 28 consecutive trading days ending on the third Business Day (as defined in the Purchase Agreement) preceding the Agreement Date. Pursuant to the Purchase Agreement, the remaining equity in CarOffer (the “Remaining Equity”) is being retained by the then-current equity holders of CarOffer and subject to certain call and put arrangements discussed below.

Pursuant to the Purchase Agreement, the Company established a retention pool in an aggregate amount of $8,000 in the form of RSUs to be issued pursuant to the Company’s standard form of RSU agreement under the 2017 Plan, (i) $6,000 of which was granted to certain CarOffer employees following the Closing in accordance with the terms of the Purchase Agreement and (ii) $2,000 of which is available for issuance to future CarOffer employees in accordance with the terms of the Purchase Agreement. RSUs issued from the retention pool will be subject to vesting based on rendering of future services.

In addition, the Company, TopCo, each Member and CarOffer MidCo, LLC, a Delaware limited liability company, entered into the Second Amended and Restated Limited Liability Company Agreement, dated as of December 9, 2020 (the “CarOffer Operating Agreement”), pursuant to which, among other matters, the Company secured the right to appoint a majority of the members of the Board of Managers of CarOffer, other rights customary for a transaction of this nature and the put and call rights described below. On November 23, 2021, the CarOffer Operating Agreement was amended and restated for administrative purposes, including principally to recapitalize certain of the membership units thereunder without changing overall consideration payable by the Company thereunder.

In the second half of 2022, the Company had a call right (the “2022 Call Right”), exercisable in its sole discretion, to acquire a portion of the Remaining Equity representing up to twenty-five percent (25%) of the fully diluted capitalization of CarOffer (such acquired Remaining Equity, the “2022 Acquired Remaining Equity”) at an implied CarOffer value (the “2022 Call Right Value”) of seven (7) times CarOffer’s trailing twelve months gross profit as of June 30, 2022 (calculated in accordance with the defined terms and subject to the adjustments set forth in the CarOffer Operating Agreement, included as Exhibit 10.27 to the Annual Report on Form 10-K as of December 31, 2021 filed on February 25, 2022). During the year ended December 31, 2022, the Company determined not to exercise its call right to acquire up to an additional 25% of the fully diluted capitalization of CarOffer.

In the second half of 2024, (a) the Company will have a call right (the “2024 Call Right”), exercisable in its sole discretion, to acquire all, and not less than all, of the Remaining Equity that it has not acquired pursuant to the 2022 Call Right and the Closing, at the greater of (i) (x) one hundred million dollars ($100,000,000), and (y) the 2022 Call Right Value, whichever is less, and (ii) an implied CarOffer value of twelve (12) times CarOffer’s trailing twelve months EBITDA as of June 30, 2024 (in each case calculated in accordance with the defined terms and subject to the adjustments set forth in the CarOffer Operating Agreement), and (b) the representative of the holders of the Remaining Equity will have a put right (the “2024 Put Right”), exercisable in his, her or their sole discretion, to have the holders of the Remaining Equity sell to the Company, all, and not less than all, of the Remaining Equity at an implied CarOffer value of twelve (12) times CarOffer’s trailing twelve months EBITDA as of June 30, 2024 (calculated in accordance with the defined terms and subject to the adjustments set forth in the CarOffer Operating Agreement). The determination of whether the 2024 Call Right or the 2024 Put Right is ultimately exercised is as set forth in the CarOffer Operating Agreement. The consideration to be paid by the Company in connection with the exercise of either the 2024 Call Right or the 2024 Put Right, as applicable, will be in the form of cash and/or shares of Class A common stock, as determined by the Company in its sole discretion.

The foregoing summary of the Purchase Agreement, the CarOffer Operating Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in their entirety by, the full text of the Purchase Agreement and the CarOffer Operating Agreement, which are included as Exhibit 2.1 to the Annual Report on Form 10-K as of December 31, 2020 filed on February 21, 2021 and Exhibit 10.27 to the Annual Report on Form 10-K as of December 31, 2021 filed on February 25, 2022, respectively.

In connection with the Company’s acquisition of a 51% interest in CarOffer, the then-outstanding unvested incentive units (“CO Incentive Units”) of CarOffer and unvested Class CO CarOffer units (the "Subject Units”) remained outstanding and will vest over the requisite service periods as discussed below.

Grants of the CO Incentive Units are subject to the CarOffer 2020 Equity Incentive Plan, adopted effective November 24, 2020 (the “2020 CO Plan”), the applicable award agreement, and the CarOffer Operating Agreement. Following the Company’s acquisition of the 51% interest in CarOffer on January 14, 2021, remaining unvested CO Incentive Units will vest over a period of three (3) years, with one third having vested on January 14, 2022 and one third vesting on each of January 14, 2023 and January 14, 2024, provided that a grantee’s continuous service to CarOffer has not terminated on the applicable vesting date. Under the terms of the grants, vesting of unvested CO Incentive Units is accelerated in the event of (i) a change of control of CarOffer (which, for the avoidance of doubt, does not include the Company’s acquisition of the 51% interest on January 14, 2021), (ii) the death or disability of the grantee, (iii) termination of the grantee’s employment with CarOffer without cause, or (iv) termination of grantee’s employment by the grantee for good reason. Upon termination of a grantee’s continuous service to CarOffer voluntarily by the grantee (other than for good reason) or by CarOffer for cause, all of such grantee’s unvested CO Incentive Units are forfeited. In addition, if a grantee’s continuous service terminates, then CarOffer has the option to repurchase any outstanding CO Incentive Units from the grantee.

In addition to the 2020 CO Plan, on December 9, 2020 CarOffer entered into a Vesting Agreement (the “Vesting Agreement”) regarding the vesting of Subject Units beneficially owned by Bruce Thompson, the founder and CEO of CarOffer, and certain affiliated persons (collectively, the “T5 Holders”) in connection with the Company’s then-anticipated acquisition of a 51% interest in CarOffer. Pursuant to the Vesting Agreement, 432,592 Subject Units beneficially owned by the T5 Holders vest in three (3) approximately equal installments, with one third having vested on January 14, 2022 and one third vesting on each of January 14, 2023 and January 14, 2024, subject to the terms of the Vesting Agreement. As more particularly described in the Vesting Agreement, unvested Subject Units are subject to forfeiture in the event that Mr. Thompson’s relationship with CarOffer terminates other than in the event of a termination without cause (as defined in the Vesting Agreement) or due to Mr. Thompson’s death or disability. The Vesting Agreement also provides for acceleration of any unvested Subject Units in the event of the termination of Mr. Thompson’s employment with CarOffer without cause, Mr. Thompson’s death or disability, or the consummation of an eligible liquidity event (as defined in the Vesting Agreement).

In connection with the Closing, CarOffer reserved 228,571 incentive units (the "2021 Incentive Units") for purposes of establishing an employee incentive equity plan. Thereafter, CarOffer formed CarOffer Incentive Equity, LLC (“CIE”), a Delaware manager-managed limited liability company managed by the Company, and established the CIE 2021 Equity Incentive Plan (the “2021 CO Plan). The 2021 CO Plan and related documentation, including the applicable award agreement, a vesting agreement between CarOffer and CIE, and the CarOffer Operating Agreement, provide for an incentive equity grant structure whereby 2021 Incentive Units will be granted to CIE and 2021 CO Plan grantees will receive an associated equity interest in CIE (the “CIE Interest”), with back-to-back vesting between the 2021 Incentive Units and the associated CIE Interest. Subject to any modifications as may be approved by the CarOffer Board of Managers in its discretion, grants under the 2021 CO Plan will vest over a period of three (3) years from the grant date, one third each on the first, second, and third anniversaries of the applicable grant date, provided that a grantee’s continuous service to CarOffer has not terminated on the applicable grant date. Upon termination of a grantee’s continuous service to CarOffer, all of such grantee’s unvested 2021 Incentive Units are forfeited. As of December 31, 2022 and 2021, there had not been any grants of 2021 Incentive Units under the 2021 CO Plan.

CO Incentive Units, Subject Units and 2021 Incentive Units are liability-classified awards because the awards can be put to the Company at a formula price such that the holders do not bear the risks and rewards associated with equity ownership. For liability-classified awards, the fair value was determined on the date of issuance using a Least Square Monte Carlo simulation model. Liability-classified awards are remeasured to fair value each period until settlement. Until March 31, 2022, the Least Square Monte Carlo simulation model was used for remeasurement. During the three months ended June 30, 2022, the Company refined its model for determining the fair value of liability-classified awards as a result of obtaining gross profit actuals through the trailing twelve-months ended June 30, 2022 measurement period for the first call option. Since March 31, 2022, the fair value has typically been determined using a Monte Carlo simulation model. During the year ended December 31, 2022, the Company determined not to exercise the Company's call right to acquire up to an additional 25% of the fully diluted capitalization of CarOffer. The valuation of these liability awards is now derived from the Company’s 2024 call right and CarOffer’s 2024 put right. The determination of the fair value is affected by CarOffer’s equity value, EBITDA, and Excess Parent Capital (as defined in the CarOffer Operating Agreement, included as Exhibit 10.27 to the Annual Report on Form 10-K as of December 31, 2021 filed on February 25, 2022) that drive the exercise price of future call/put rights, as well as a number of assumptions including market price of risk, volatility, correlation, and risk-free interest rate. As a result of the EBITDA and Excess Parent Capital projections for CarOffer as of December 31, 2022, a Monte Carlo simulation model was not required as of December 31, 2022. The Company will continue to assess its valuation approach quarterly. The Company recognizes stock compensation expense on a cumulative catch-up basis based on the fair value of the liability awards at each reporting period.

The Company issues shares of Class A common stock upon the vesting of RSUs and the exercise of stock options out of its shares available for issuance. The Company issues CO Incentive Units and Subject Units out of CarOffer’s units available for issuance. The Company accounts for forfeitures when they occur.

The Company recognizes compensation expense on a straight-line basis over the requisite service period.

The tax effect of differences between tax deductions related to stock compensation and the corresponding financial statement expense compensation are recognized as an income tax benefit or expense within the provision for income taxes in the consolidated income statements. The permanent differences, including excess tax benefits and expenses, are recognized within accrued expenses, accrued income taxes, and other current liabilities in the consolidated balance sheets and classified as an operating activity in the consolidated statements of cash flows. The temporary differences are recognized within deferred tax assets in the consolidated balance sheets.

For the year ended December 31, 2022 and 2021, the income tax expense related to stock-based compensation was $4,181 and $1,179, respectively. For the year ended December 31, 2020, income tax expense related to stock-based compensation was immaterial.

As of December 31, 2022, 2021, and 2020, the income tax benefit from stock-based compensation expense, recognized through the Company's deferred tax asset in the consolidated balance sheets, was $5,441, $5,301, and $4,796, respectively.

See Note 10 of these consolidated financial statements for a summary of the stock option, RSU and CO Incentive Unit activity for the year ended December 31, 2022.

Common Stock Share Repurchases

Repurchases of the Company's common stock are recognized as a reduction to common stock at par value and the remainder is recognized as a reduction to additional paid-in capital in the consolidated balance sheets. Repurchases in excess of the par value are recognized as a reduction to retained earnings in the consolidated balance sheets in the event that additional paid-in capital is reduced to zero.

If there is a difference between the trade date and the settlement date for shares repurchased as of period end, a liability is recognized within accrued expenses, accrued income taxes and other current liabilities in the consolidated balance sheets.

As a result of the US Inflation Reduction Act of 2022 (the "IRA"), effective on January 1, 2023, the Company will be required to pay a 1% excise tax on certain stock repurchases. Based on the Company’s initial evaluation, the Company does not believe the IRA will have a material impact on its income tax provision and cash taxes. The excise tax is considered a direct and incremental cost of the share repurchase and will be recognized as a reduction to additional paid-in capital in the consolidated balance sheets. Other direct and incremental costs, such as commissions and legal expenses, are recognized as a reduction to additional paid-in capital in the consolidated balance sheets.

Advertising Costs

Advertising costs are expensed as incurred and recognized within sales and marketing expense in the consolidated income statements. For the years ended December 31, 2022, 2021, and 2020, advertising expense was $156,128, $151,457, and $155,580, respectively.

Comprehensive Income

Comprehensive income is defined as the change in stockholders’ equity of a business enterprise during a period from transactions and other events and circumstances from non‑owner sources. Comprehensive income consists of consolidated net income and other comprehensive income (loss), which includes certain changes in equity that are excluded from consolidated net income. Specifically, cumulative foreign currency translation adjustments are included in accumulated other comprehensive (loss) income. As of December 31, 2022 and 2021, accumulated other comprehensive (loss) income is presented separately in the consolidated balance sheets and consists entirely of cumulative foreign currency translation adjustments.

Recent Accounting Pronouncements Not Yet Adopted

From time to time, new accounting pronouncements are issued by the FASB or other standard-setting bodies and adopted by the Company on or prior to the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. As of December 31, 2022, there are no new accounting pronouncements that the Company is considering adopting.

Revenue Recognition

12 Months Ended

Dec. 31, 2022

Revenue from Contract with Customer [Abstract]

Revenue Recognition

3. Revenue Recognition

The following table summarizes revenue from contracts with customers by services and products for the year ended December 31, 2022, 2021, and 2020:


	Year Ended December 31,
	2022		2021		2020
Marketplace	$	658,771	$	636,942	$	551,451
Dealer-to-Dealer		320,119		224,831		—
IMCO		676,145		89,600		—
Total	$	1,655,035	$	951,373	$	551,451

The Company provides disaggregation of revenue by services and products, by income statement presentation, by segment, and by geographical region.

Revenue by services and products is disaggregated by (i) marketplace services, (ii) Dealer-to-Dealer services and products, and (iii) IMCO services and products as disclosed above.

Revenue by income statement presentation is disaggregated by (i) marketplace, (ii) wholesale, and (iii) product revenue sources as disclosed in the consolidated income statements. Marketplace services are included within marketplace revenue in the consolidated income statements. The Dealer-to-Dealer and IMCO services and products are included within both wholesale revenue and product revenue in the consolidated income statements.

Revenue by segment is disaggregated by (i) U.S. Marketplace and (ii) Digital Wholesale segments as disclosed in Note 13 of these consolidated financial statements. Marketplace services are included in the U.S. Marketplace segment and in the Other category of segment reporting. The Dealer-to-Dealer and IMCO services and products are included in the Digital Wholesale segment.

Revenue by geographic region is disaggregated by (i) United States and (ii) International regions as disclosed in Note 13 of these consolidated financial statements.

The Company believes these categories best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) requires that the Company disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied as of the relevant year end.

For contracts with an original expected duration greater than one year, the aggregate amount of the transaction price allocated to the performance obligations that were unsatisfied as of December 31, 2022 was approximately $7.2 million, which the Company expects to recognize over the next twelve months.

For contracts with an original expected duration of one year or less, the Company has applied the practical expedient available under ASC 606 to not disclose the amount of transaction price allocated to unsatisfied performance obligations as of December 31, 2022. For performance obligations not satisfied as of December 31, 2022, and to which this expedient applies, the nature of the performance obligations, the variable consideration and any consideration from contracts with customers not included in the transaction price is consistent with performance obligations satisfied as of December 31, 2022.

For the year ended December 31, 2022 and 2021, revenue recognized from amounts included in deferred revenue at the beginning of the period was $12,784 and $9,137, respectively.

In response to the COVID-19 pandemic, the Company reduced the subscription fees for paying dealers by at least 50% on all marketplace subscriptions for the April and May 2020 service periods, as well as provided a fee reduction on all June 2020 marketplace subscriptions of 20% for paying dealers in the United States and Canada and 50% for paying dealers in the United Kingdom. These fee reductions resulted in a modification to contracts with initial contractual periods greater than one month. For any contract modified, the Company calculated the remaining transaction price and allocated the consideration over the remaining performance obligations. These fee reductions materially and adversely impacted revenue for the year ended December 31, 2020, resulting in an approximately $50 million decrease in marketplace revenue. These fee reductions did not impact revenue for the year ended December 31, 2022. These fee reductions did not materially impact revenue for the year ended December 31, 2021. During the December 2020 and February 2021 service periods, the Company also suspended charging subscription fees for subscribing dealers in the United Kingdom. These fee reductions are included in the Company’s variable consideration assessment. These fee reductions did not impact revenue for the years ended December 31, 2022. These fee reductions did not materially impact revenue for the years ended December 31, 2021 and 2020.

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI https://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Fair Value of Financial Instruments

Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2022

Fair Value Disclosures [Abstract]

4. Fair Value of Financial Instruments

As of December 31, 2022 and 2021, assets measured at fair value on a recurring basis consist of the following:


	As of December 31, 2022
	Quoted Prices in Active Markets for Identical Assets (Level 1 Inputs)		Significant Other Observable Inputs (Level 2 Inputs)		Significant Unobservable Inputs (Level 3 Inputs)		Total
Cash equivalents:
Money market funds	$	175,486	$	—	$	—	$	175,486
Total	$	175,486	$	—	$	—	$	175,486


	As of December 31, 2021
	Quoted Prices in Active Markets for Identical Assets (Level 1 Inputs)		Significant Other Observable Inputs (Level 2 Inputs)		Significant Unobservable Inputs (Level 3 Inputs)		Total
Cash equivalents:
Money market funds	$	157,525	$	—	$	—	$	157,525
Investments:
Certificates of deposit		—		90,000		—		90,000
Total	$	157,525	$	90,000	$	—	$	247,525

As of December 31, 2022, the Company did not hold any investments. As of December 31, 2021, investments consist of the following:


	As of December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Investments:
Certificates of deposit due in one year or less	$	90,000	$	—	$	—	$	90,000
Total	$	90,000	$	—	$	—	$	90,000

Property and Equipment, Net

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

5. Property and Equipment, Net

As of December 31, 2022 and 2021, property and equipment, net consist of the following:


	As of December 31,
	2022			2021
Capitalized equipment	$	7,877		$	8,349
Capitalized internal-use software		7,429			3,041
Capitalized website development		36,369			22,037
Furniture and fixtures		8,615			8,615
Leasehold improvements		24,225			24,082
Construction in progress		4,161			854
Finance lease right-of-use assets		420			556
		89,096			67,534
Less accumulated depreciation and amortization		(48,968	)		(35,324	)
Total	$	40,128		$	32,210

For the year ended December 31, 2022, 2021, and 2020, depreciation and amortization expense, excluding amortization of intangible assets, amortization of capitalized hosting arrangements, and write offs, was $14,618, $10,324 and $8,198, respectively.

For the year ended December 31, 2022, the Company wrote off $165 of Digital Wholesale segment capitalized website development costs within wholesale cost of revenue in the consolidated income statements related to certain developed technology in which the Company has decided to cease investment. For the year ended December 31, 2021, the Company wrote off $2,481 of U.S. Marketplace segment of capitalized website development costs within operating expense in the consolidated income statements related to certain developed technology in which the Company has decided to cease investment. For the year ended December 31, 2020, the Company wrote off $1,151 of capitalized website development costs, which are included in the Other category of segment reporting, of which $844 related to the exit of certain international markets in connection with the Expense Reduction Plan.

As of December 31, 2022, capitalized website development costs increased $14,332 due to continued investment in the Company's product offerings. Capitalized internal-use software costs increased $4,388 due to additions related to internal engineering and development tools. Construction in progress increased $3,307 due to the development of the Company's future headquarters at 1001 Boylston, as discussed in Note 9 to these consolidated financial statements.

Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

6. Goodwill and Other Intangible Assets

Goodwill

As of December 31, 2022, changes in the carrying value of goodwill are as follows:


	U.S. Marketplace		Digital Wholesale		Other			Total
Balance as of December 31, 2021	$	12,477	$	130,451	$	15,359		$	158,287
Foreign currency translation adjustment		—		—		(820	)		(820	)
Balance as of December 31, 2022	$	12,477	$	130,451	$	14,539		$	157,467

The Company assessed its goodwill for impairment and did not identify any impairment as of December 31, 2022.

Other Intangible Assets

As of December 31, 2022 and 2021, intangible assets consist of the following:


	As of December 31, 2022
	Weighted Average Remaining Useful Life (years)		Gross Carrying Amount		Accumulated Amortization		Accumulated Impairment		Net Carrying Amount
Brand		8.4	$	32,129	$	7,227	$	—	$	24,902
Customer relationships		1.0		19,870		13,609		—		6,261
Developed technology		1.0		65,212		42,674		647		21,891
Total			$	117,211	$	63,510	$	647	$	53,054


	As of December 31, 2021
	Weighted Average Remaining Useful Life (years)		Gross Carrying Amount		Accumulated Amortization		Accumulated Impairment		Net Carrying Amount
Brand		9.4	$	32,274	$	4,206	$	—	$	28,068
Customer relationships		2.0		19,870		7,314		—		12,556
Developed technology		2.0		65,212		21,274		647		43,291
Total			$	117,356	$	32,794	$	647	$	83,915

For the year ended December 31, 2022, 2021, and 2020, amortization of intangible assets was $30,716, $30,152, and $1,993, respectively.

For the year ended December 31, 2021, the Company wrote off $647 of U.S. Marketplace segment intangible assets within marketplace cost of revenue in the consolidated income statements related to certain developed technology which the Company has decided to cease investment.

As of December 31, 2022, estimated amortization expense of intangible assets for future periods is as follows:


Year Ending December 31,	Amortization Expense
2023		30,141
2024		4,066
2025		3,028
2026		3,028
2027		3,028
Thereafter		9,763
Total	$	53,054

Accrued Expenses, Accrued Income Taxes and Other Current Liabilities and Other Non-Current Liabilities

12 Months Ended

Dec. 31, 2022

Payables and Accruals [Abstract]

Accrued Expenses, Accrued Income Taxes and Other Current Liabilities and Other Non-Current Liabilities

7. Accrued Expenses, Accrued Income Taxes and Other Current Liabilities and Other Non-Current Liabilities

As of December 31, 2022 and 2021, accrued expenses, accrued income taxes and other current liabilities consist of the following:


	As of December 31,
	2022		2021
Accrued bonus	$	11,007	$	11,777
Accrued tax distributions to redeemable noncontrolling interest holders		16		8,701
Receivables in transit, net of payments received in advance from the third-party payment processor		—		28,075
Other accrued expenses and other current liabilities		28,170		30,033
Total	$	39,193	$	78,586

The decrease of $28,075 in the receivables in transit, net of payments received in advance from third-party payment processors is due to the timing of payments remitted by the third-party.

The decrease of $8,685 in the accrued tax distributions to redeemable noncontrolling interest holders is due to cash settlement of the balance as of December 31, 2021 during the year ended December 31, 2022.

As of December 31, 2022 and 2021, other non-current liabilities consist of the following:


	As of December 31,
	2022		2021
CO Incentive Unit and Subject Unit liability-classified awards	$	—	$	21,095
Other non-current liabilities		5,301		2,544
Total	$	5,301	$	23,639

In connection with the Company’s acquisition of a 51% interest in CarOffer, the then-outstanding unvested CO Incentive Units and unvested Subject Units remained outstanding. The decrease of $21,095 related to CO Incentive Unit and Subject Unit liability-classified awards is due to a decrease in the valuation of the awards to zero, following the mark to market valuation adjustments.

Debt

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Debt

8. Debt

As of December 31, 2022 and 2021, the Company had no long-term debt outstanding.

Revolving Credit Facility

On September 26, 2022, the Company entered into a Credit Agreement (the “Credit Agreement”) by and among the Company, PNC Bank, National Association, as administrative agent and collateral agent and an L/C Issuer (as defined in the Credit Agreement), and the other lenders, L/C Issuers and parties thereto from time to time. The Credit Agreement consists of the 2022 Revolver, which allows the Company to borrow up to $400.0 million, $50.0 million of which may be comprised of a letter of credit sub-facility. The borrowing capacity under the Credit Agreement may be increased in accordance with the terms and subject to the adjustments as set forth in the Credit Agreement. For example, the borrowing capacity may be increased by an amount up to the greater of $250.0 million or 100% of Four Quarter Consolidated EBITDA (as defined in the Credit Agreement) if certain criteria are met and subject to certain restrictions. Any such increase requires lender approval. Proceeds of any borrowings may be used for general corporate purposes. The 2022 Revolver is scheduled to mature on September 26, 2027.

The applicable interest rate is, at the Company's option, based on a number of different benchmark rates and applicable spreads, based on the ratio of the outstanding principal amount of the Company’s secured indebtedness to the trailing four quarters of consolidated EBITDA (as determined under the Credit Agreement, the “Consolidated Secured Net Leverage Ratio”). The Credit Agreement also requires the Company to pay a commitment fee to the lenders with respect of the unutilized revolving commitments at a rate ranging from 0.125% to 0.175% per annum based on the Consolidated Secured Net Leverage Ratio, as determined on a quarterly basis.

The 2022 Revolver is secured by a first priority lien on substantially all tangible and intangible property of the Company and its subsidiary, Auto List, Inc., as well as any future guarantors, and pledges of the equity of CarOffer and certain wholly-owned subsidiaries, in each case subject to certain exceptions, limitations and exclusions from the collateral. The Credit Agreement includes customary events of default and requires the Company to comply with customary affirmative and negative covenants, including a financial covenant requiring that the Company not exceed certain Consolidated Secured Net Leverage Ratio ranges at the end of each fiscal quarter. The Company was in compliance with all covenants as of December 31, 2022.

As of December 31, 2022, there were no borrowings and no letters of credit outstanding under the 2022 Revolver.

As of December 31, 2022, commitment fees under the 2022 Revolver were immaterial.

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

12 Months Ended

Dec. 31, 2022

Commitments and Contingencies

9. Commitments and Contingencies

Contractual Obligations and Commitments

As of December 31, 2022, all of the Company’s property, equipment, and externally sourced internal-use software have been purchased with cash with the exception of amounts related to unpaid property and equipment, capitalized website development, capitalized internal-use software and capitalized hosting arrangements and amounts related to obligations under finance leases as disclosed in the consolidated statements of cash flows. The Company has no material long-term purchase obligations outstanding with any vendors or third parties.

Leases

The Company’s lease obligations consist of various leases for office space in: Boston, Massachusetts; Cambridge, Massachusetts; San Francisco, California; Addison, Texas; Plano, Texas; Detroit, Michigan; Raleigh, North Carolina; and Dublin, Ireland. The Company's leases in Plano, Texas, Detroit, Michigan, and Raleigh, North Carolina are immaterial.

The Company has non-cancellable lease terms through 2033 for its various commenced operating leases, certain of which include the option to extend the lease term up to two additional periods of five years. Additionally, certain leases provide for annual rent increases through the terms of the leases, leasehold improvement incentives, and variable payments related to operating expenses, taxes, utilities, insurance, and maintenance expenses. Certain leases also contain non-lease components in the contract. Non-lease components relate to operating expenses, parking, utilities, and maintenance expenses.

The Company has non-cancellable lease terms through 2025 for its various operating subleases, certain of which include the option to extend the sublease term up to one additional period of three years. Additionally, certain subleases provide for annual rent increases through the terms of the leases. Certain subleases also contain both lease and non-lease components in the contract. Non-lease components relate to operating expenses, parking, utilities, and maintenance expenses.

The Company’s operating lease agreement in Boston, Massachusetts at 1001 Boylston Street has been signed, but the lease term has not commenced. The “Commencement Date” of the lease term is the earlier to occur of (i) the date that is twelve months following the Delivery Date (as defined in the lease) and (ii) the date that the Company first occupies the premises for the normal conduct of business for the Permitted Use (as defined in the lease). The initial term will commence on the Commencement Date and expire on the date that is one hundred and eighty full calendar months after the Commencement Date (plus the partial month, if any, immediately following the Commencement Date). The lease provides for the option to terminate early under certain circumstances and contains options to extend the lease term for two additional periods of five years. The lease provides for annual rent increases through the term of the lease, leasehold improvement incentives, and variable payments related to operating expenses, management fees, taxes, utilities, insurance, and maintenance expenses. The lease also contains both lease and non-lease components in the contract. Non-lease components relate to operating expenses, parking, utilities, and maintenance expenses. As the lease has been signed but the lease term has not commenced as of December 31, 2022, there is no impact to the consolidated financial statements as of December 31, 2022. The lease commenced in February 2023 as the Company has been granted access to begin its build out. The Company is expecting to move into the office space in 2024.

The Company’s operating lease agreement in Detroit, Michigan has also been signed, but the lease term has not commenced as of December 31, 2022. As the lease has been signed but the lease term has not commenced as of December 31, 2022, there is no impact to the consolidated financial statements as of December 31, 2022. The lease commenced in February 2023. The lease terms are consistent with that of its commenced operating leases.

The Company’s financing lease obligations, which consist of a lease for furniture and office equipment, are immaterial.

The Company's leases in Boston, Massachusetts, Cambridge, Massachusetts and San Francisco, California have associated letters of credit, which are recognized within restricted cash in the consolidated balance sheets. As of December 31, 2022 and 2021, restricted cash was $14,615 and $16,336, respectively, and primarily related to cash held at a financial institution in an interest bearing cash account as collateral for the letters of credit related to the contractual provisions for the Company’s building leases and pass-through payments from customers related to the Company's wholesale business. As December 31, 2022 and 2021, portions of restricted cash were classified as a short-term asset and long-term asset, as disclosed in the consolidated balance sheets.

For the years ended December 31, 2022, 2021, and 2020, the Company recognized $16,732, $15,844, and $14,157, respectively, of lease costs for leases that have commenced.

For the year ended December 31, 2022, the Company recognized $1,809 of sublease income. There was no sublease income for the year ended December 31, 2021. For the year ended December 31, 2020, the Company recognized immaterial sublease income.

As of December 31, 2022 and 2021, for leases that have commenced the weighted average remaining lease term was 7.1 years and 7.6 years, respectively, and the weighted average discount rate was 4.9% and 5.3%, respectively. As the Company’s leases do not provide an implicit rate, the Company uses an estimated incremental borrowing rate based on the information available at lease commencement in determining the present value of lease payments. The Company estimated the incremental borrowing rate based on the rate of interest the Company would have to pay to borrow a similar amount on a collateralized basis over a similar term. The Company has no historical debt transactions and a collateralized rate is estimated based on a group of peer companies. The Company used the incremental borrowing rate on January 1, 2019 for leases that commenced prior to that date.

As of December 31, 2022, future minimum lease payments are as follows:


Year Ending December 31,	Operating Lease Commitments
2023	$	17,841
2024		15,499
2025		7,154
2026		6,344
2027		6,463
Thereafter		29,058
Total lease payments		82,359
Less imputed interest		(15,941	)
Total	$	66,418

The chart above does not include options to extend lease terms that are not reasonably certain of being exercised or leases signed but not yet commenced as of December 31, 2022. As of December 31, 2022, total estimated future minimum lease payments for leases signed but not yet commenced are estimated to be $246,492.

As of December 31, 2022, known contractual obligations that are fixed and determinable, including leases signed but not yet commenced based on expected contractual commencement date, are as follows:


	Total		Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years
	(in thousands)
Operating lease obligations	$	328,851	$	17,960	$	34,645	$	45,076	$	231,170
Total contractual obligations	$	328,851	$	17,960	$	34,645	$	45,076	$	231,170

As of December 31, 2022, future minimum sublease income payments are as follows:


Year Ending December 31,	Sublease Income Payments
2023	$	2,167
2024		1,947
2025		1,023
2026		—
2027		—
Thereafter		—
Total	$	5,137

Acquisitions

On January 14, 2021 the Company completed the acquisition of a 51% interest in CarOffer, an automated instant vehicle trade platform based in Addison, Texas, with the option to acquire portions of the remaining equity in the future. During the year ended December 31, 2022, the Company determined not to exercise its call right to acquire up to an additional 25% of the fully diluted capitalization of CarOffer. In the second half of 2024, the Company will have a call right to acquire all, and not less than all, of the remaining equity interests in CarOffer and the representative of the holders of the remaining equity will have a put right to sell to the Company, all, and not less than all, of the remaining equity interests in CarOffer. Details of this acquisition are more fully described in Note 2 to these consolidated financial statements.

Legal Matters

From time to time the Company may become involved in legal proceedings or be subject to claims arising in the ordinary course of its business. The Company is not presently subject to any pending or threatened litigation that it believes, if determined adversely to the Company, individually, or taken together, would reasonably be expected to have a material adverse effect on its business or financial results. However, litigation is inherently unpredictable and the future outcome of legal proceedings and other contingencies may be unexpected or differ from the Company’s estimated liabilities, which could have a material adverse effect on the Company’s future financial results.

Guarantees and Indemnification Obligations

For the years ended December 31, 2022 and 2021 income for guarantees purchased by dealers was $10,026 and $5,537, respectively. For the year ended December 31, 2022, the loss, net of gains recognized within cost of revenue in the consolidated income statements resulting from the dealer's exercise of guarantees was $4,568. For the year ended December 31, 2021, the net loss resulting from the dealer's exercise of guarantees was immaterial.

As of December 31, 2020, the Company did not have any guarantees.

Stock-based Compensation

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Stock-based Compensation

10. Stock‑based Compensation

CarGurus Equity Incentive Plans

The Company’s Amended and Restated 2006 Equity Incentive Plan (the “2006 Plan”) provided for the issuance of non-qualified stock options, restricted stock and stock awards to the Company’s employees, officers, directors and consultants. The 2006 Plan authorized up to an aggregate of 3,444,668 shares of the Company's Class B common stock for such issuances. In conjunction with the effectiveness of the Company’s 2015 Equity Incentive Plan (the “2015 Plan”), the Board voted that no further stock options or other equity-based awards may be granted under the 2006 Plan.

In 2015, the Board first adopted the 2015 Plan, which became effective on June 26, 2015. The 2015 Plan provided for the issuance of stock-based incentives to employees, consultants and non-employee directors. As of the effective date of the 2015 Plan, up to 603,436 shares of common stock were authorized for issuance under the 2015 Plan. The 2015 Plan was amended and restated effective August 6, 2015 to permit the granting of restricted stock units (“RSUs”) under the 2015 Plan, to remove Class B common stock from the pool of shares available for issuance under the 2015 Plan and to make certain other desired changes. The 2015 Plan was further amended and restated at October 15, 2015 to add a ten-year term and to make certain other desired changes.

The 2015 Plan was further amended and restated effective August 22, 2016 to merge the 2006 Plan into the 2015 Plan, to increase the number of shares of Class A common stock that may be issued under the 2015 Plan, and to lengthen the term of the 2015 Plan to expire on August 21, 2026. In addition, pursuant to this amendment and restatement of the 2015 Plan, prior to giving effect to the recapitalization that occurred on June 21, 2017, there were (i) 618,691 shares of Class A common stock, plus (ii) 802,562 shares of Class B common stock authorized under the 2015 Plan; provided, however, that (1) the number of shares of Class A common stock was increased, on a share for share basis, by the number of shares of Class B common stock that were (a) subject to outstanding options granted under the 2006 Plan that expired, terminated, or were canceled for any reason without having been exercised, (b) surrendered in payment of the exercise price of outstanding options granted under the 2006 Plan or (c) withheld in satisfaction of tax withholding upon exercise of outstanding options granted under the 2006 Plan, and the number of shares of Class B common stock reserved under the amended and restated 2015 Plan was decreased, on a corresponding share for share basis, (2) no new awards of Class B common stock could be granted under the amended and restated 2015 Plan, and (3) except with respect to outstanding options granted under the 2006 Plan that were exercised on or after the date of the amendment and restatement, no Class B common stock could be issued under the 2015 Plan.

In connection with the recapitalization that occurred on June 21, 2017, the 2015 Plan was further amended and restated to account for each outstanding common stock option being adjusted such that each share of common stock underlying such option became two shares of Class A common stock and four shares of Class B common stock underlying such option, and each outstanding RSU being adjusted such that each share of common stock issuable upon settlement of such RSU became two shares of Class A common stock and four shares of Class B common stock issuable upon settlement of such RSU. Pursuant to the 2015 Plan as further amended in connection with the recapitalization, there were (i) 3,181,740 shares of Class A common stock and (ii) 5,161,644 shares of Class B common stock authorized for issuance under the 2015 Plan.

In connection with the Company's initial public offering ("IPO"), in October 2017, the Board adopted, and the Company’s stockholders approved, the Omnibus Incentive Compensation Plan (the “2017 Plan”) for the purpose of granting incentive stock options, non-qualified stock options, stock awards, stock units, other share-based awards and cash awards to employees, advisors and consultants to the Company and its subsidiaries and non-employee members of the Board. The 2017 Plan is the successor to the 2015 Plan. The 2017 Plan authorizes the issuance or transfer of the sum of: (i) 7,800,000 shares of the Company’s Class A common stock, plus (ii) the number of shares of Class A common stock (up to 4,500,000 shares) equal to the sum of (x) the number of shares of Class A common stock and Class B common stock of the Company subject to outstanding awards under the 2015 Plan as of October 10, 2017 that terminate, expire or are canceled, forfeited, exchanged, or surrendered on or after October 10, 2017 without having been exercised, vested, or paid prior to October 10, 2017, including shares tendered or withheld to satisfy tax withholding obligations with respect to outstanding grants under the 2015 Plan, plus (y) the number of shares of Class A common stock reserved for issuance under the 2015 Plan that remain available for grant under the 2015 Plan as of October 10, 2017. The aggregate number of shares of Class A common stock that may be issued or transferred under the 2017 Plan pursuant to incentive stock options will not exceed 12,300,000 shares of Class A common stock. Unless determined otherwise by the Compensation Committee of the Board, as of the first trading day of January of each calendar year during the term of the 2017 Plan (excluding any extensions), eligible beginning with calendar year 2019, an additional number of shares of Class A common stock will be added to the number of shares of the Company’s Class A common stock authorized to be issued or transferred under the 2017 Plan and the number of shares authorized to be issued or transferred pursuant to incentive stock options, equal to 4% of the total number of shares of Class A common stock outstanding on the last trading day in December of the immediately preceding calendar year, or 6,000,000 shares, whichever is less, or such lesser amount as determined by the Board (the “Evergreen Increase”). The Compensation Committee of the Board determined to not effectuate the Evergreen Increase that was otherwise scheduled to have occurred on each of January 2, 2019, January 2, 2020 and January 4, 2021. On January 3, 2022, an additional 4,070,921 shares of the Company's Class A Common Stock was authorized to be issued or transferred under the 2017 Plan pursuant to the Evergreen Increase. On January 3, 2023, an additional 4,065,466 shares of the Company's Class A Common Stock was authorized to be issued or transferred under the 2017 Plan pursuant to the Evergreen Increase. In conjunction with the adoption of the 2017 Plan, options and RSUs outstanding under the 2015 Plan will remain outstanding but no additional grants will be made from the 2015 Plan.

As of December 31, 2022, 4,939,416 shares of Class A common stock were available for issuance under the 2017 Plan.

CarOffer Equity Incentive Plans

The 2020 CO Plan provides for the issuance of CO Incentive Units to CarOffer’s employees, officers, managers, and consultants. The 2020 CO Plan authorized up to an aggregate of 485,714 CO Incentive Units for such issuances, all of which were issued prior to the close of the CarOffer Acquisition. At the time of close, 142,857 CO Incentive Units were accelerated and redeemed. The compensation relating to these CO Incentive Units was deemed to be outside of consideration transferred. Therefore, for the year ended December 31, 2021, the Company recognized an additional $1,229 of stock-based compensation expense. As of December 31, 2022 and 2021, 342,857 and 342,857 CO Inventive Units were unvested, respectively. During the year ended December 31, 2022, no CO Incentive Units were granted, vested or were forfeited. As of December 31, 2022, there is no unrecognized stock‑based compensation expense related to the unvested CO Incentive Units, as a result of the revaluation of the awards. These CO Incentive Units are accounted for within other non-current liabilities in the consolidated balance sheets.

As of December 31, 2022, there were no CO Incentive Units available for issuance under the 2020 CO Plan.

The Vesting Agreement provides for the vesting of the Subject Units beneficially owned by the T5 Holders, which vest in accordance with the terms described in Note 2 of these consolidated financial statements. As of December 31, 2022 and 2021, 288,395 and 432,592 Subject Units issued and unvested, respectively. During the year ended December 31, 2022, no Subject Units were granted, 144,197 Subject Units vested and no Subject Units were forfeited. As of December 31, 2022, there is no unrecognized stock‑based compensation expense related to the unvested Subject Units as a result of the revaluation of the awards. These Subject Units are accounted for within other non-current liabilities in the consolidated balance sheets.

As of December 31, 2022, there were no Subject Units available for issuance under the Vesting Agreement.

The 2021 CO Plan provides for an incentive equity grant structure whereby 2021 Incentive Units will be granted to CIE and 2021 CO Plan grantees will receive an associated CIE Interest, with back-to-back vesting between the 2021 Incentive Units and the associated CIE Interest. The 2021 CO Plan authorized up to an aggregate of 228,571 2021 Incentive Units for such issuances.

As of December 31, 2022, 228,571 2021 Incentive Units were available for issuance under the 2021 CO Plan.

Stock Options

During the year ended December 31, 2022, stock option activity is as follows:


	Common Stock			Weighted- Average Exercise Price for Equity		Weighted- Average Remaining Contractual Life (In Years)		Aggregate Intrinsic Value(1)
Outstanding, December 31, 2021		949,307		$	22.42		6.7	$	11,877
Granted		30,266			35.00
Exercised		(131,061	)		5.51				3,774
Forfeited or Expired		(21,903	)		35.61
Outstanding, December 31, 2022		826,609		$	25.22		6.2	$	3,172
Exercisable as of December 31, 2022		485,092		$	17.81		4.8	$	3,172

(1)

As of December 31, 2022 and 2021, the aggregate intrinsic value was calculated based on the positive difference, if any, between the estimated fair value of common stock on December 31, 2022 and 2021, respectively, or the date of exercise, as appropriate, and the exercise price of the underlying options.

During the year ended December 31, 2021, there were 619,618 options granted. During the year ended December 31, 2020, there were no options granted.

During the years ended December 31, 2021 and 2020, the aggregate intrinsic value for options exercised was $6,027 and $8,401, respectively.

As of December 31, 2022, there was $5,173 unrecognized stock‑based compensation expense related to unvested stock options that is expected to be recognized over a weighted‑average period of 2.2 years.

Restricted Stock Units

During the year ended December 31, 2022, RSU activity is as follows:


	Number of Shares			Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value
Unvested outstanding, December 31, 2021		3,834,322		$	33.02	$	128,987
Granted		2,784,845			28.94
Vested		(1,649,294	)		33.43
Forfeited		(485,582	)		32.71
Unvested outstanding, December 31, 2022		4,484,291		$	29.36	$	62,825

During the years ended December 31, 2021 and 2020, the weighted-average grant-date fair value of RSUs granted was $33.83 and $28.47 per share, respectively.

During the years ended December 31, 2021 and 2020, RSUs that vested and settled totaled 1,575,206 and 1,347,464 respectively.

During the years ended December 31, 2021 and 2020, the total fair value of RSUs vested was $52,423 and $40,613 respectively.

As of December 31, 2022, there was $110,444 of unrecognized stock‑based compensation expense related to unvested RSUs that is expected to be recognized over a weighted‑average period of 2.7 years.

Stock-based Compensation Expense

For the year ended December 31, 2022, 2021, and 2020, stock-based compensation expense by award type and where the stock-based compensation expense was recognized in the Company’s consolidated income statements is as follows:


	Year Ended December 31,
	2022			2021		2020
Options	$	2,553		$	2,471	$	17
Restricted Stock Units		52,224			52,916		45,304
CO Incentive Units and Subject Units		(21,095	)		22,323		—
Total	$	33,682		$	77,710	$	45,321

The decrease of $43,418 for the year ended December 31, 2022 compared to the year ended December 31, 2021 in CO Incentive Units and Subject Units stock-based compensation expense was due to a decrease in the valuation of the awards to zero, following the mark to market valuation adjustments.


	Year Ended December 31,
	2022		2021		2020
Cost of revenue	$	475	$	417	$	293
Sales and marketing expense		7,733		12,801		10,564
Product, technology, and development expense		20,266		22,289		20,741
General and administrative expense		5,208		42,203		13,723
Total	$	33,682	$	77,710	$	45,321

For the years ended December 31, 2022, 2021, and 2020, excluded from stock-based compensation expense was $4,468, $3,247, and $1,906, respectively, of capitalized website development costs, capitalized internal-use software costs, and capitalized hosting arrangements.

For the years ended December 31, 2022, 2021, and 2020, the income tax benefit from stock-based compensation expense, recognized through the Company's deferred tax asset in the consolidated balance sheets was $5,441, $5,301, and $4,796, respectively.

During the years ended December 31, 2022, 2021, and 2020, the Company withheld 566,267, 527,237, and 447,160 shares of Class A common stock, respectively, to satisfy employee tax withholding requirements for net share settlements of restricted stock units. The shares withheld return to the authorized, but unissued, pool under the Company's 2017 Plan and can be reissued by the Company. For the years ended December 31, 2022, 2021, and 2020, total payments to satisfy employee tax withholding requirements for net share settlements of restricted stock units, were $16,022, $15,388, and $11,184 respectively, and are reflected as a financing activity in the consolidated statements of cash flows.

Common Stock Reserved for Future Issuance

As of December 31, 2022, the Company had reserved the following shares of Class A common stock for future issuance:


Common stock options outstanding			826,609
Unvested restricted stock units outstanding			4,484,291
Shares available for issuance under the 2017 Plan			4,939,416
Total shares of authorized common stock reserved for future issuance			10,250,316

Common Stock Share Repurchases

On December 8, 2022, the Company announced that its Board of Directors authorized a new share repurchase program (the “Share Repurchase Program”), pursuant to which the Company may, from time to time, purchase shares of its Class A common stock for an aggregate purchase price not to exceed $250 million. Share repurchases under the Share Repurchase Program may be made through a variety of methods, including but not limited to open market purchases, privately negotiated transactions and transactions that may be effected pursuant to one or more plans under Rule 10b5-1 and/or Rule 10b-18 of the Exchange Act. The Share Repurchase Program does not obligate the Company to repurchase any minimum dollar amount or number of shares. The Share Repurchase Program has an expiration date of December 31, 2023, and prior to its expiration may be modified, suspended, or discontinued by the Company’s Board of Directors at any time without prior notice. All repurchased shares will be retired. The Company expects to fund share repurchases through cash on hand and cash generated from operations.

During the year ended December 31, 2022, the Company repurchased and retired 1,350,473 shares for $18,691, at an average cost of $13.84 per share, under this authorization. As of December 31, 2022, the Company had remaining authorization to purchase up to $231,309 of the Company's common stock under the Share Repurchase Program.

Earnings Per Share

12 Months Ended

Dec. 31, 2022

Earnings Per Share [Abstract]

Earnings Per Share

11. Earnings Per Share

The Company has two classes of common stock authorized: Class A common stock and Class B common stock. The rights of the holders of Class A and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to ten votes per share. Each share of Class B common stock is convertible into one share of Class A common stock at the option of the holder at any time or automatically upon certain events described in the Company’s amended and restated certificate of incorporation, including upon either the death or voluntary termination of the Company’s Executive Chairman. The Company allocates undistributed earnings attributable to common stock between the common stock classes on a one‑to‑one basis when computing net income per share. As a result, basic and diluted net income per share of Class A common stock and per share of Class B common stock are equivalent.

During the years ended December 31, 2022, holders of Class B common stock converted no shares of Class B common stock to Class A common stock. During the years ended December 31, 2021, and 2020, holders of Class B common stock converted 3,077,327 shares and 1,238,144 shares, respectively, of Class B common stock to Class A common stock.

Basic net income per share (“Basic EPS”) is computed by dividing consolidated net income adjusted for net (loss) income attributable to redeemable noncontrolling interest and changes in the redemption value of redeemable noncontrolling interest, if applicable, by the weighted-average number of common shares outstanding during the reporting period. The Company computes the weighted-average number of common shares outstanding during the reporting period using the total number of shares of Class A common stock and Class B common stock outstanding as of the last day of the previous year plus the weighted-average of any additional shares issued and outstanding during the reporting period, less the weighted-average of any shares repurchased during the period.

Diluted net income per share (“Diluted EPS”) gives effect to all potentially dilutive securities. Diluted EPS is computed by dividing consolidated net income adjusted for net (loss) income attributable to redeemable noncontrolling interest and changes in the redemption value of redeemable noncontrolling interest, if applicable and dilutive, by the weighted-average number of common shares outstanding during the reporting period using (i) the number of shares of common stock used in the Basic EPS calculation as indicated above, (ii) if dilutive, the incremental weighted-average common stock that the Company would issue upon the exercise of stock options and the vesting of RSUs, (iii) if dilutive, market-based performance awards based on the number of shares that would be issuable as of the end of the reporting period assuming the end of the reporting period was also the end of the contingency period. The dilutive effect of these common stock equivalents is reflected in diluted earnings per share by application of the treasury stock method. The if-converted method is used to calculate the number of shares issuable upon exercise of the 2024 Put Right (as defined in Note 2 to these consolidated financial statements), inclusive of CarOffer noncontrolling interest and incentive and subject units, that would be issuable as of the end of the reporting period assuming the end of the reporting period was also the end of the contingency period.

For the years ended December 31, 2022, 2021, and 2020, a reconciliation of the numerator and denominator used in the calculation of basic and diluted net income per share is as follows:


	Year Ended December 31,
	2022			2021			2020
Numerator:
Consolidated net income	$	78,954		$	110,373		$	77,553
Net (loss) income attributable to redeemable noncontrolling interest		(5,433	)		1,129			—
Accretion of redeemable noncontrolling interest to redemption value		(109,398	)		109,398			—
Net income (loss) attributable to common stockholders — basic	$	193,785		$	(154	)	$	77,553
Net (loss) income attributable to redeemable noncontrolling interest		(5,433	)		—			—
Accretion of redeemable noncontrolling interest to redemption value		(109,398	)		—			—
Net income (loss) attributable to common stockholders — diluted	$	78,954		$	(154	)	$	77,553
Denominator:
Weighted-average number of shares of common stock used in computing net income (loss) per share attributable to common stockholders — basic		118,474,991			117,142,062			112,854,524
Dilutive effect of share equivalents resulting from stock options		275,330			—			674,018
Dilutive effect of share equivalents resulting from unvested restricted stock units		366,258			—			321,273
Dilutive effect of share equivalents resulting from CarOffer incentive units and noncontrolling interest		9,034,395			—			—
Weighted-average number of shares of common stock used in computing net income (loss) per share attributable to common stockholders — diluted		128,150,974			117,142,062			113,849,815
Net income (loss) per share attributable to common stockholders:
Basic	$	1.64		$	(0.00	)	$	0.69
Diluted	$	0.62		$	(0.00	)	$	0.68

For the years ended December 31, 2022, 2021, and 2020, potentially dilutive common stock equivalents that have been excluded from the calculation of diluted weighted‑average shares outstanding as their effect would have been anti‑dilutive are as follows:


	Year Ended December 31,
	2022		2021		2020
Stock options outstanding		587,494		617,504		—
Restricted stock units outstanding		2,634,463		2,867,330		2,722,226
CO Incentive Units, Subject Units and noncontrolling interest		—		1,509,750		—

For the year ended December 31, 2021, shares of Class A common stock potentially issuable under market-based performance awards of approximately 14,682 RSUs were excluded from the calculation of weighted average shares used to compute Diluted EPS as the market-based vesting conditions had not been achieved as of the reporting period end date and as such there were zero contingently issuable shares. During the year ended December 31, 2022, the Company modified its market-based performance awards to contain only service-based vesting conditions in line with the Company's other restricted stock unit awards. As a result, there are no market-based RSUs outstanding as of December 31, 2022.

Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

12. Income Taxes

For the years ended December 31, 2022, 2021, and 2020, the domestic and foreign components of income before income taxes are as follows:


	Year Ended December 31,
	2022		2021		2020
United States	$	110,213	$	148,037	$	97,120
Foreign		1,149		1,323		1,990
Income before income taxes	$	111,362	$	149,360	$	99,110

For the years ended December 31, 2022, 2021, and 2020, the components of the provision for (benefit from) income taxes are as follows:


	Year Ended December 31,
	2022			2021			2020
Current provision (benefit):
Federal	$	43,207		$	22,133		$	(3,733	)
State		11,140			10,438			2,288
Foreign		175			253			767
		54,522			32,824			(678	)
Deferred provision (benefit):
Federal		(20,278	)		5,698			19,539
State		(1,789	)		669			2,734
Foreign		(47	)		(204	)		(38	)
		(22,114	)		6,163			22,235
Income tax provision	$	32,408		$	38,987		$	21,557

For the year ended December 31, 2022, 2021, and 2020, the components of the effective tax rate are as follows:


	Year Ended December 31,
	2022			2021			2020
U.S. federal taxes at statutory rate		21.0	%		21.0	%		21.0	%
State taxes, net of federal benefit		7.7			7.5			6.2
Nondeductible expenses		0.5			0.3			0.4
Stock compensation		2.8			0.3			0.2
Foreign rate differential		(0.1	)		(0.2	)		(0.2	)
Federal and state credits		(4.7	)		(2.6	)		(3.2	)
CARES Act		—			—			(2.4	)
Disallowed officer compensation		0.8			1.0			—
Investment in partnership		1.0			(0.3	)		—
Federal, state, and foreign provision to return differences		(0.8	)		(0.7	)		—
Uncertain tax provision		0.5			—			—
Other	(0.0)				(0.2	)		(0.2	)
Consolidated effective tax rate		28.7	%		26.1	%		21.8	%
Effective tax rate attributable to redeemable noncontrolling interest		(1.0	)		0.2			—
Effective tax rate attributable to CarGurus, Inc.		27.7	%		26.3	%		21.8	%

For the year ended December 31, 2022, the effective tax rate attributable to CarGurus, Inc. was 27.7%, which is greater than the U.S. federal statutory rate primarily due to state and local income taxes, the exclusion of loss from investment in partnership, shortfalls on the taxable compensation of share-based awards and the Section 162(m) excess officer compensation limitation, partially offset by federal and state research and development tax credits.

For the year ended December 31, 2021, the effective tax rate attributable to CarGurus, Inc. was 26.3%, which is greater than the U.S. federal statutory rate primarily due to state and local income taxes, shortfalls on the taxable compensation of share-based awards and the Section 162(m) excess officer compensation limitation, which became applicable in May 2021 upon the expiration of the transition period permitted following the IPO, partially offset by federal and state research and development tax credits.

For the year ended December 31, 2020, the effective tax rate attributable to CarGurus, Inc. was 21.8%, which is greater than the U.S. federal statutory rate primarily due to state and local income taxes with partial offset by the benefits from the U.S. federal and state research and development credits and the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

As of December 31, 2022 and 2021, the approximate income tax effect of each type of temporary difference and carryforward is as follows:


	As of December 31,
	2022			2021
Deferred tax assets:
Net operating loss carryforwards	$	461		$	1,429
Credit carryforwards		928			4,241
Stock-based compensation		5,441			5,301
Lease liability		13,557			15,640
Investment in partnership		8,325			6,709
Accruals and reserves		3,770			5,942
Capitalized research and development		25,342			—
		57,824			39,262
Valuation Allowance		(258	)		(229	)
		57,566			39,033
Deferred tax liabilities:
Prepaid expenses		(2,466	)		(1,850	)
Deferred commissions		(4,200	)		(3,508	)
Right of use assets		(11,237	)		(12,955	)
Intangible assets		(733	)		(1,111	)
Property and equipment		(3,496	)		(6,289	)
		(22,132	)		(25,713	)
Net deferred tax assets	$	35,434		$	13,320

As of December 31, 2022 and 2021, valuation allowances were immaterial. Based upon the level of historical U.S. earnings and future projections over the period in which the net deferred tax assets are deductible, the Company believes it is more likely than not that it will realize the benefits of these deductible differences, with the exception of the deferred tax asset related to intangible assets in Ireland. For the years ended December 31, 2022 and 2021, the change in the valuation allowance was $29 and $71, respectively.

As of December 31, 2022, the Company had federal and state net operating loss (“NOL”) carryforwards of $821 and $4,051, respectively. The federal NOL carryforward, subject to an annual limitation of 80% of taxable income, does not expire. The state NOL carryforwards expire at various dates through 2040. As of December 31, 2022, the Company had federal and state tax credit carryforwards of $673 and $322, respectively, available to reduce future tax liabilities. The federal tax credit carryforward expires in 2040. The state tax credit carryforwards indefinitely as it is related to California. Utilization of the NOL and tax credit carryforwards, respectively, may be subject to an annual limitation due to ownership change limitations that have occurred previously or that could occur in the future, as provided by Section 382 of the Internal Revenue Code (“Section 382”), as well as similar state provisions. Ownership changes may limit the amount of NOL or tax credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382, results from transactions that increase the ownership of 5% stockholders in the stock of a corporation by more than 50% in the aggregate over a three-year period.

As of December 31, 2022 and 2021, changes in the gross uncertain tax position (excluding interest and penalties) are as follows:


	As of December 31,
	2022		2021
Balance as of December 31, 2021	$	—	$	—
Increase related to current year tax provision		198		—
Increase related to prior year tax provision		400		—
Balance as of December 31, 2022	$	598	$	—

For the year ended December 31, 2022, income tax expense and liability related to uncertain tax positions, exclusive of immaterial interest or penalties related to uncertain tax provisions, was $598, which would favorably affect the Company's effective tax rate, if recognized. For the year ended December 31, 2021, no income tax expense and liability related to uncertain tax positions was recognized.

The Company permanently reinvests the earnings, if any, of its foreign subsidiaries and, therefore, does not provide for U.S. income taxes that could result from the distribution of those earnings to the Company. As of December 31, 2022 and December 31, 2021, the amount of unrecognized deferred U.S. taxes on these earnings was immaterial.

The Company and its subsidiaries are subject to various U.S. federal, state, and foreign income tax examinations. The Company is currently not subject to income tax examination for the tax years of 2018 and prior as a result of applicable statute of limitations of the Internal Revenue Service (“IRS”) and a majority of applicable state jurisdictions. The Company is currently not subject to examination in its foreign jurisdictions for tax years 2016 and prior.

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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Segment and Geographic Information

Segment and Geographic Information

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

13. Segment and Geographic Information

Effective the first quarter of 2022, the Company revised its segment reporting from two reportable segments, United States and International, to one reportable segment. The Company concluded the change in segment reporting was not a triggering event for goodwill impairment. The change in segment reporting was made to align with changes made in the manner the Company's chief operating decision maker (the “CODM”) reviews the Company’s operating results in assessing performance and allocating resources. The Company’s Chief Executive Officer is the CODM.

Effective the first quarter of 2022, the CODM assessed the Company's performance on a consolidated basis rather than by geographical location as a result of the international segment becoming less significant relative to the overall business. The CODM reviews revenue and operating income as a proxy for the operating performance of the Company’s operations.

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 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.

Revenue and costs discretely incurred by reportable segments, including depreciation and amortization, are included in the calculation of reportable income (loss) from operations. Digital Wholesale segment income (loss) from operations does not reflect certain IMCO related capitalized website development amortization incurred by the U.S. Marketplace segment. Digital Wholesale segment income (loss) from operations does reflect certain IMCO marketing and lead generation fees allocated from the U.S. Marketplace segment. Asset information by reportable segment is not provided to the CODM as asset information is assessed and reviewed on a consolidated basis.

For the years December 31, 2022, 2021, and 2020, segment revenue, segment income (loss) from operations and segment depreciation and amortization are as follows:


	Year Ended December 31,
	2022		2021		2020
Segment Revenue
U.S. Marketplace	$	614,136	$	594,602	$	519,835
Digital Wholesale		996,264		314,431		—
Other		44,635		42,340		31,616
Total	$	1,655,035	$	951,373	$	551,451


	Year Ended December 31,
	2022			2021			2020
Segment Income (Loss) from Operations:
U.S. Marketplace	$	125,796		$	151,343		$	120,836
Digital Wholesale		(9,174	)		7,189			—
Other		(8,144	)		(10,264	)		(23,080	)
Total	$	108,478		$	148,268		$	97,756


	Year Ended December 31,
	2022		2021		2020
Segment Depreciation and Amortization:
U.S. Marketplace	$	14,214	$	11,313	$	9,456
Digital Wholesale		30,690		28,394		—
Other		430		769		1,886
Total	$	45,334	$	40,476	$	11,342

For the years December 31, 2022, 2021, and 2020, a reconciliation between segment income from operations to consolidated income before income taxes is as follows:


	Year Ended December 31,
	2022		2021		2020
Total segment income from operations	$	108,478	$	148,268	$	97,756
Other income, net		2,884		1,092		1,354
Consolidated income before income taxes	$	111,362	$	149,360	$	99,110

As of December 31, 2022, 2021, and 2020, segment assets are as follows:


	Year Ended December 31,
	2022		2021		2020
Segment Assets:
U.S. Marketplace	$	531,118	$	453,837	$	470,286
Digital Wholesale		352,274		442,216		—
Other		43,710		35,521		32,012
Total	$	927,102	$	931,574	$	502,298

For the years ended December 31, 2022, 2021, and 2020, revenue by geographical region is as follows:


	Year Ended December 31,
	2022		2021		2020
Revenue by Geographic Region:
United States	$	1,610,400	$	909,033	$	519,835
International		44,635		42,340		31,616
Total	$	1,655,035	$	951,373	$	551,451

As of December 31, 2022, 2021, and 2020, long-lived assets outside of the United States were immaterial.

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

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Employee Benefit Plans

12 Months Ended

Dec. 31, 2022

Retirement Benefits [Abstract]

Employee Benefit Plans

14. Employee Benefit Plans

The Company maintains a defined contribution savings plan for all eligible U.S. employees under Section 401(k) of the Internal Revenue Code. Effective January 1, 2022, the Company updated its matching policy, under which the Company matches 50% of an employee’s annual contributions to the 401(k) plan, up to a maximum of 8% of the employee’s base salary, bonus and commissions paid during the year. For the years ended December 31, 2021 and 2020, the Company matched 50% of an employee’s annual contributions to the 401(k) plan, up to a maximum of the lesser of (i) 6% of the employee’s base salary, bonus and commissions paid during the year or (ii) $5,000. Matching contributions are subject to vesting based on the employee’s start date and length of service. Employees can designate the investment of their 401(k) accounts into several mutual funds. The Company does not allow investment in its common stock through the 401(k) plan.

The Company's subsidiary, CarOffer, maintains its own defined contribution savings plan for all eligible U.S. employees under Section 401(k) of the Internal Revenue Code. For the year ended December 31, 2022, CarOffer matched 50% of a CarOffer employee’s annual contributions to the 401(k) plan, up to a maximum of the lesser of (i) 6% of the CarOffer employee’s base salary, bonus and commissions paid during the year or (ii) $5,000. Matching contributions are subject to vesting based on the CarOffer employee’s start date and length of service. CarOffer employees can designate the investment of their 401(k) accounts into several mutual funds. For the years ended December 31, 2021 and 2020, CarOffer did not have a defined contribution savings plan.

For the years ended December 31, 2022, 2021, and 2020, total employer contributions to the 401(k) plan were $5,498, $2,960, and $2,675, respectively.

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2022

Principles of Consolidation

Basis of Presentation

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Subsequent Event Considerations

Use of Estimates

Concentration of Credit Risk

For the years ended December 31, 2022, 2021, and 2020, no individual customer accounted for more than 10% of total revenue.

Cash, Cash Equivalents, and Investments

As of December 31, 2022, the Company held no investments.

Restricted Cash

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded based on the amount due from the customer and a third-party payment processor. Accounts receivable do not bear interest.

As of December 31, 2022 and 2021, changes in the Company’s allowance for doubtful accounts are as follows:


	Balance at Beginning of Period		Provision		Write–offs, net of recoveries			Balance at End of Period
Year ended December 31, 2022	$	420	$	1,769	$	(380	)	$	1,809
Year ended December 31, 2021		616		999		(1,195	)		420

Inventory

Property and Equipment


		Estimated Useful Life (In Years)
Capitalized equipment		3
Capitalized internal-use software		3
Capitalized website development		3
Furniture and fixtures		3 to 5
Right-of-use assets		Lease term, or asset life if shorter
Leasehold improvements		Lease term, or asset life if shorter

Expenditures for repairs and maintenance are charged to expense as incurred, whereas major betterments are capitalized as additions to property and equipment.

Impairment of Long-Lived Assets

Impairment of Long‑Lived Assets

Capitalized Website Development and Capitalized Internal-Use Software Costs

Capitalized Hosting Arrangements

Business Combinations

Valuation of Acquired Assets and Liabilities

Intangible Assets

Goodwill

For the years ended December 31, 2022, 2021, and 2020 the Company did not identify any impairment of its goodwill.

Redeemable Noncontrolling Interest

Leases

Contingent Liabilities

Income Taxes

The Company will continue to monitor the changes in tax laws and regulations to evaluate their potential impact on its business.

Fair Value of Financial Instruments

Level 1 — Quoted unadjusted prices for identical instruments in active markets.

Level 3 — Model‑derived valuations in which one or more significant inputs or significant value drivers are unobservable, including assumptions developed by the Company.

Debt

As of December 31, 2022, there were no borrowings and no letters of credit outstanding under the 2022 Revolver (as defined in Note 7 to these consolidated financial statements).

As of December 31, 2022, commitment fees under the 2022 Revolver were immaterial (as defined in Note 7 to these consolidated financial statements).

Deferred Financing Costs

As of December 31, 2022, deferred financing costs were $2,442. As of December 31, 2021, no deferred financing costs were recognized.

Foreign Currency Translation

Revenue Recognition

Sources of Revenue

Revenue Recognition

1) Identify the contract with a customer

2) Identify the performance obligations in the contract

3) Determine the transaction price

4) Allocate the transaction price to performance obligations in the contract

5) Recognize revenue when or as the Company satisfies a performance obligation

Marketplace Revenue - Description

The Company offers paid Listings packages for the Autolist and PistonHeads websites.

The Company also offers dealer advertising products for the PistonHeads website.

The Company also offers non-dealer advertising products for the Autolist and PistonHeads websites.

Marketplace Revenue - Revenue Recognition

Wholesale Revenue - Description

Wholesale Revenue - Revenue Recognition

Wholesale revenue is presented net of any taxes collected from customers.

Product Revenue - Description

Product - Revenue Recognition

Product revenue presented net of any taxes collected from customers.

Contracts with Multiple Performance Obligations

Costs to Obtain a Contract

Deferred Revenue

Marketplace Cost of Revenue

Wholesale Cost of Revenue

Product Cost of Revenue

Guarantees and Indemnification Obligations

As of December 31, 2020, the Company did not have any guarantees.

Stock-Based Compensation

Stock‑Based Compensation

For stock‑based awards granted under the Company’s stock‑based compensation plans, the fair value of each award is determined on the date of grant.

The weighted average assumptions utilized to determine the fair value of options granted during the year ended December 31, 2022 and 2021 are as follows:


	Year Ended December 31,
	2022			2021
Expected dividend yield		—			—
Expected volatility		48.03	%		50.95	%
Risk–free interest rate		1.47	%		0.69	%
Expected term (in years)	6.11				6.06

During the year ended December 31, 2020, no options were granted.

The Company recognizes compensation expense on a straight-line basis over the requisite service period.

See Note 10 of these consolidated financial statements for a summary of the stock option, RSU and CO Incentive Unit activity for the year ended December 31, 2022.

Common Stock Share Repurchases

Advertising Costs

Comprehensive Income

Recent Accounting Pronouncements Not Yet Adopted

Goodwill and Other Intangible Assets

The Company assessed its goodwill for impairment and did not identify any impairment as of December 31, 2022.

Earnings Per Share

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2022

Summary of Changes in Allowance for Doubtful Accounts

As of December 31, 2022 and 2021, changes in the Company’s allowance for doubtful accounts are as follows:


	Balance at Beginning of Period		Provision		Write–offs, net of recoveries			Balance at End of Period
Year ended December 31, 2022	$	420	$	1,769	$	(380	)	$	1,809
Year ended December 31, 2021		616		999		(1,195	)		420

Schedule of Estimated Useful Lives of Property and Equipment

The estimated useful lives of the Company’s property and equipment are as follows:


		Estimated Useful Life (In Years)
Capitalized equipment		3
Capitalized internal-use software		3
Capitalized website development		3
Furniture and fixtures		3 to 5
Right-of-use assets		Lease term, or asset life if shorter
Leasehold improvements		Lease term, or asset life if shorter

Summary of Weighted Average Assumptions Utilized to Determine Fair Value of Options Granted

The weighted average assumptions utilized to determine the fair value of options granted during the year ended December 31, 2022 and 2021 are as follows:


	Year Ended December 31,
	2022			2021
Expected dividend yield		—			—
Expected volatility		48.03	%		50.95	%
Risk–free interest rate		1.47	%		0.69	%
Expected term (in years)	6.11				6.06

Revenue Recognition (Tables)

12 Months Ended

Dec. 31, 2022

Revenue from Contract with Customer [Abstract]

Summary of Revenue from Contracts with Customers by Services and Products

The following table summarizes revenue from contracts with customers by services and products for the year ended December 31, 2022, 2021, and 2020:


	Year Ended December 31,
	2022		2021		2020
Marketplace	$	658,771	$	636,942	$	551,451
Dealer-to-Dealer		320,119		224,831		—
IMCO		676,145		89,600		—
Total	$	1,655,035	$	951,373	$	551,451

Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2022

Fair Value Disclosures [Abstract]

Schedule of Fair Value Levels, Assets Measured at Fair Value on Recurring Basis

As of December 31, 2022 and 2021, assets measured at fair value on a recurring basis consist of the following:


	As of December 31, 2022
	Quoted Prices in Active Markets for Identical Assets (Level 1 Inputs)		Significant Other Observable Inputs (Level 2 Inputs)		Significant Unobservable Inputs (Level 3 Inputs)		Total
Cash equivalents:
Money market funds	$	175,486	$	—	$	—	$	175,486
Total	$	175,486	$	—	$	—	$	175,486


	As of December 31, 2021
	Quoted Prices in Active Markets for Identical Assets (Level 1 Inputs)		Significant Other Observable Inputs (Level 2 Inputs)		Significant Unobservable Inputs (Level 3 Inputs)		Total
Cash equivalents:
Money market funds	$	157,525	$	—	$	—	$	157,525
Investments:
Certificates of deposit		—		90,000		—		90,000
Total	$	157,525	$	90,000	$	—	$	247,525

Schedule of Investments

As of December 31, 2022, the Company did not hold any investments. As of December 31, 2021, investments consist of the following:


	As of December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Investments:
Certificates of deposit due in one year or less	$	90,000	$	—	$	—	$	90,000
Total	$	90,000	$	—	$	—	$	90,000

Property and Equipment, Net (Tables)

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment, Net

As of December 31, 2022 and 2021, property and equipment, net consist of the following:


	As of December 31,
	2022			2021
Capitalized equipment	$	7,877		$	8,349
Capitalized internal-use software		7,429			3,041
Capitalized website development		36,369			22,037
Furniture and fixtures		8,615			8,615
Leasehold improvements		24,225			24,082
Construction in progress		4,161			854
Finance lease right-of-use assets		420			556
		89,096			67,534
Less accumulated depreciation and amortization		(48,968	)		(35,324	)
Total	$	40,128		$	32,210

Goodwill and Other Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Changes in Carrying Value of Goodwill

As of December 31, 2022, changes in the carrying value of goodwill are as follows:


	U.S. Marketplace		Digital Wholesale		Other			Total
Balance as of December 31, 2021	$	12,477	$	130,451	$	15,359		$	158,287
Foreign currency translation adjustment		—		—		(820	)		(820	)
Balance as of December 31, 2022	$	12,477	$	130,451	$	14,539		$	157,467

Summary of Other Intangible Assets

As of December 31, 2022 and 2021, intangible assets consist of the following:


	As of December 31, 2022
	Weighted Average Remaining Useful Life (years)		Gross Carrying Amount		Accumulated Amortization		Accumulated Impairment		Net Carrying Amount
Brand		8.4	$	32,129	$	7,227	$	—	$	24,902
Customer relationships		1.0		19,870		13,609		—		6,261
Developed technology		1.0		65,212		42,674		647		21,891
Total			$	117,211	$	63,510	$	647	$	53,054


	As of December 31, 2021
	Weighted Average Remaining Useful Life (years)		Gross Carrying Amount		Accumulated Amortization		Accumulated Impairment		Net Carrying Amount
Brand		9.4	$	32,274	$	4,206	$	—	$	28,068
Customer relationships		2.0		19,870		7,314		—		12,556
Developed technology		2.0		65,212		21,274		647		43,291
Total			$	117,356	$	32,794	$	647	$	83,915

Summary of Estimated Amortization Expense of Intangible Assets

As of December 31, 2022, estimated amortization expense of intangible assets for future periods is as follows:


Year Ending December 31,	Amortization Expense
2023		30,141
2024		4,066
2025		3,028
2026		3,028
2027		3,028
Thereafter		9,763
Total	$	53,054

Tabular disclosure of goodwill by reportable segment and in total which includes a rollforward schedule.

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Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef
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-Name Accounting Standards Codification
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Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef
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Reference 5: http://www.xbrl.org/2009/role/commonPracticeRef
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Schedule of Accrued Expenses, Accrued Income Taxes and Other Current Liabilities

Accrued Expenses, Accrued Income Taxes and Other Current Liabilities and Other Non-Current Liabilities (Tables)

12 Months Ended

Dec. 31, 2022

Payables and Accruals [Abstract]

As of December 31, 2022 and 2021, accrued expenses, accrued income taxes and other current liabilities consist of the following:


	As of December 31,
	2022		2021
Accrued bonus	$	11,007	$	11,777
Accrued tax distributions to redeemable noncontrolling interest holders		16		8,701
Receivables in transit, net of payments received in advance from the third-party payment processor		—		28,075
Other accrued expenses and other current liabilities		28,170		30,033
Total	$	39,193	$	78,586

Schedule of Other Non-Current Liabilities

As of December 31, 2022 and 2021, other non-current liabilities consist of the following:


	As of December 31,
	2022		2021
CO Incentive Unit and Subject Unit liability-classified awards	$	—	$	21,095
Other non-current liabilities		5,301		2,544
Total	$	5,301	$	23,639

Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Summary of Future Minimum Lease Payments

As of December 31, 2022, future minimum lease payments are as follows:


Year Ending December 31,	Operating Lease Commitments
2023	$	17,841
2024		15,499
2025		7,154
2026		6,344
2027		6,463
Thereafter		29,058
Total lease payments		82,359
Less imputed interest		(15,941	)
Total	$	66,418

Summary of Contractual Obligations

As of December 31, 2022, known contractual obligations that are fixed and determinable, including leases signed but not yet commenced based on expected contractual commencement date, are as follows:


	Total		Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years
	(in thousands)
Operating lease obligations	$	328,851	$	17,960	$	34,645	$	45,076	$	231,170
Total contractual obligations	$	328,851	$	17,960	$	34,645	$	45,076	$	231,170

Schedule of Future Minimum Sublease Income Payments

As of December 31, 2022, future minimum sublease income payments are as follows:


Year Ending December 31,	Sublease Income Payments
2023	$	2,167
2024		1,947
2025		1,023
2026		—
2027		—
Thereafter		—
Total	$	5,137

Stock-based Compensation (Tables)

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Summary of Stock Option Activity

During the year ended December 31, 2022, stock option activity is as follows:


	Common Stock			Weighted- Average Exercise Price for Equity		Weighted- Average Remaining Contractual Life (In Years)		Aggregate Intrinsic Value(1)
Outstanding, December 31, 2021		949,307		$	22.42		6.7	$	11,877
Granted		30,266			35.00
Exercised		(131,061	)		5.51				3,774
Forfeited or Expired		(21,903	)		35.61
Outstanding, December 31, 2022		826,609		$	25.22		6.2	$	3,172
Exercisable as of December 31, 2022		485,092		$	17.81		4.8	$	3,172

(1)

Summary of Restricted Stock Unit Activity

During the year ended December 31, 2022, RSU activity is as follows:


	Number of Shares			Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value
Unvested outstanding, December 31, 2021		3,834,322		$	33.02	$	128,987
Granted		2,784,845			28.94
Vested		(1,649,294	)		33.43
Forfeited		(485,582	)		32.71
Unvested outstanding, December 31, 2022		4,484,291		$	29.36	$	62,825

Summary of Stock-based Compensation Expense by Award Type


	Year Ended December 31,
	2022			2021		2020
Options	$	2,553		$	2,471	$	17
Restricted Stock Units		52,224			52,916		45,304
CO Incentive Units and Subject Units		(21,095	)		22,323		—
Total	$	33,682		$	77,710	$	45,321

Summary of Allocation of Stock-based Compensation Expense


	Year Ended December 31,
	2022		2021		2020
Cost of revenue	$	475	$	417	$	293
Sales and marketing expense		7,733		12,801		10,564
Product, technology, and development expense		20,266		22,289		20,741
General and administrative expense		5,208		42,203		13,723
Total	$	33,682	$	77,710	$	45,321

Summary of Shares of Common Stock Reserved for Future Issuance

As of December 31, 2022, the Company had reserved the following shares of Class A common stock for future issuance:


Common stock options outstanding			826,609
Unvested restricted stock units outstanding			4,484,291
Shares available for issuance under the 2017 Plan			4,939,416
Total shares of authorized common stock reserved for future issuance			10,250,316

Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2022

Earnings Per Share [Abstract]

Schedule of Reconciliation of Numerator and Denominator Used in Calculation of Basic and Diluted Net Income Per Share

For the years ended December 31, 2022, 2021, and 2020, a reconciliation of the numerator and denominator used in the calculation of basic and diluted net income per share is as follows:


	Year Ended December 31,
	2022			2021			2020
Numerator:
Consolidated net income	$	78,954		$	110,373		$	77,553
Net (loss) income attributable to redeemable noncontrolling interest		(5,433	)		1,129			—
Accretion of redeemable noncontrolling interest to redemption value		(109,398	)		109,398			—
Net income (loss) attributable to common stockholders — basic	$	193,785		$	(154	)	$	77,553
Net (loss) income attributable to redeemable noncontrolling interest		(5,433	)		—			—
Accretion of redeemable noncontrolling interest to redemption value		(109,398	)		—			—
Net income (loss) attributable to common stockholders — diluted	$	78,954		$	(154	)	$	77,553
Denominator:
Weighted-average number of shares of common stock used in computing net income (loss) per share attributable to common stockholders — basic		118,474,991			117,142,062			112,854,524
Dilutive effect of share equivalents resulting from stock options		275,330			—			674,018
Dilutive effect of share equivalents resulting from unvested restricted stock units		366,258			—			321,273
Dilutive effect of share equivalents resulting from CarOffer incentive units and noncontrolling interest		9,034,395			—			—
Weighted-average number of shares of common stock used in computing net income (loss) per share attributable to common stockholders — diluted		128,150,974			117,142,062			113,849,815
Net income (loss) per share attributable to common stockholders:
Basic	$	1.64		$	(0.00	)	$	0.69
Diluted	$	0.62		$	(0.00	)	$	0.68

Schedule of Potentially Dilutive Common Stock Equivalents Excluded from Calculation of Diluted Weighted-average Shares Outstanding


	Year Ended December 31,
	2022		2021		2020
Stock options outstanding		587,494		617,504		—
Restricted stock units outstanding		2,634,463		2,867,330		2,722,226
CO Incentive Units, Subject Units and noncontrolling interest		—		1,509,750		—

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Schedule of Domestic and Foreign Components of Income Before Income Taxes

For the years ended December 31, 2022, 2021, and 2020, the domestic and foreign components of income before income taxes are as follows:


	Year Ended December 31,
	2022		2021		2020
United States	$	110,213	$	148,037	$	97,120
Foreign		1,149		1,323		1,990
Income before income taxes	$	111,362	$	149,360	$	99,110

Schedule of Provision for (Benefit from) Income Taxes

For the years ended December 31, 2022, 2021, and 2020, the components of the provision for (benefit from) income taxes are as follows:


	Year Ended December 31,
	2022			2021			2020
Current provision (benefit):
Federal	$	43,207		$	22,133		$	(3,733	)
State		11,140			10,438			2,288
Foreign		175			253			767
		54,522			32,824			(678	)
Deferred provision (benefit):
Federal		(20,278	)		5,698			19,539
State		(1,789	)		669			2,734
Foreign		(47	)		(204	)		(38	)
		(22,114	)		6,163			22,235
Income tax provision	$	32,408		$	38,987		$	21,557

Schedule of Effective Tax Rates

For the year ended December 31, 2022, 2021, and 2020, the components of the effective tax rate are as follows:


	Year Ended December 31,
	2022			2021			2020
U.S. federal taxes at statutory rate		21.0	%		21.0	%		21.0	%
State taxes, net of federal benefit		7.7			7.5			6.2
Nondeductible expenses		0.5			0.3			0.4
Stock compensation		2.8			0.3			0.2
Foreign rate differential		(0.1	)		(0.2	)		(0.2	)
Federal and state credits		(4.7	)		(2.6	)		(3.2	)
CARES Act		—			—			(2.4	)
Disallowed officer compensation		0.8			1.0			—
Investment in partnership		1.0			(0.3	)		—
Federal, state, and foreign provision to return differences		(0.8	)		(0.7	)		—
Uncertain tax provision		0.5			—			—
Other	(0.0)				(0.2	)		(0.2	)
Consolidated effective tax rate		28.7	%		26.1	%		21.8	%
Effective tax rate attributable to redeemable noncontrolling interest		(1.0	)		0.2			—
Effective tax rate attributable to CarGurus, Inc.		27.7	%		26.3	%		21.8	%

Schedule of Income Tax Effect of Each Type of Temporary Difference and Carryforward

As of December 31, 2022 and 2021, the approximate income tax effect of each type of temporary difference and carryforward is as follows:


	As of December 31,
	2022			2021
Deferred tax assets:
Net operating loss carryforwards	$	461		$	1,429
Credit carryforwards		928			4,241
Stock-based compensation		5,441			5,301
Lease liability		13,557			15,640
Investment in partnership		8,325			6,709
Accruals and reserves		3,770			5,942
Capitalized research and development		25,342			—
		57,824			39,262
Valuation Allowance		(258	)		(229	)
		57,566			39,033
Deferred tax liabilities:
Prepaid expenses		(2,466	)		(1,850	)
Deferred commissions		(4,200	)		(3,508	)
Right of use assets		(11,237	)		(12,955	)
Intangible assets		(733	)		(1,111	)
Property and equipment		(3,496	)		(6,289	)
		(22,132	)		(25,713	)
Net deferred tax assets	$	35,434		$	13,320

Schedule of Unrecognized Tax Benefits, Excluding Interest and Penalties

As of December 31, 2022 and 2021, changes in the gross uncertain tax position (excluding interest and penalties) are as follows:


	As of December 31,
	2022		2021
Balance as of December 31, 2021	$	—	$	—
Increase related to current year tax provision		198		—
Increase related to prior year tax provision		400		—
Balance as of December 31, 2022	$	598	$	—

Segment and Geographic Information (Tables)

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

Summary of Segment Revenue, Income (Loss) and Depreciation and Amortization

For the years December 31, 2022, 2021, and 2020, segment revenue, segment income (loss) from operations and segment depreciation and amortization are as follows:


	Year Ended December 31,
	2022		2021		2020
Segment Revenue
U.S. Marketplace	$	614,136	$	594,602	$	519,835
Digital Wholesale		996,264		314,431		—
Other		44,635		42,340		31,616
Total	$	1,655,035	$	951,373	$	551,451


	Year Ended December 31,
	2022			2021			2020
Segment Income (Loss) from Operations:
U.S. Marketplace	$	125,796		$	151,343		$	120,836
Digital Wholesale		(9,174	)		7,189			—
Other		(8,144	)		(10,264	)		(23,080	)
Total	$	108,478		$	148,268		$	97,756


	Year Ended December 31,
	2022		2021		2020
Segment Depreciation and Amortization:
U.S. Marketplace	$	14,214	$	11,313	$	9,456
Digital Wholesale		30,690		28,394		—
Other		430		769		1,886
Total	$	45,334	$	40,476	$	11,342

Summary of Reconciliation Between Segment Income from Operations

For the years December 31, 2022, 2021, and 2020, a reconciliation between segment income from operations to consolidated income before income taxes is as follows:


	Year Ended December 31,
	2022		2021		2020
Total segment income from operations	$	108,478	$	148,268	$	97,756
Other income, net		2,884		1,092		1,354
Consolidated income before income taxes	$	111,362	$	149,360	$	99,110

Summary of Assets by Segment

As of December 31, 2022, 2021, and 2020, segment assets are as follows:


	Year Ended December 31,
	2022		2021		2020
Segment Assets:
U.S. Marketplace	$	531,118	$	453,837	$	470,286
Digital Wholesale		352,274		442,216		—
Other		43,710		35,521		32,012
Total	$	927,102	$	931,574	$	502,298

Summary of Revenue by Geographical Region

For the years ended December 31, 2022, 2021, and 2020, revenue by geographical region is as follows:


	Year Ended December 31,
	2022		2021		2020
Revenue by Geographic Region:
United States	$	1,610,400	$	909,033	$	519,835
International		44,635		42,340		31,616
Total	$	1,655,035	$	951,373	$	551,451

Organization and Business Description - Additional Information (Details) - Segment	3 Months Ended	9 Months Ended	12 Months Ended
	Dec. 31, 2022	Sep. 30, 2022	Dec. 31, 2022	Dec. 31, 2021	Jan. 14, 2021
Business Acquisition [Line Items]
State of incorporation			DE
Date of incorporation			Jun. 26, 2015
Number of reportable segments	2	1		2
Car Offer
Business Acquisition [Line Items]
Business acquisition, percentage of equity interest acquired	51.00%		51.00%	51.00%	51.00%

Summary of Significant Accounting Policies - Additional Information (Details)					3 Months Ended	9 Months Ended	12 Months Ended
	Apr. 01, 2023	Jan. 01, 2023	Jan. 14, 2021 USD ($) $ / shares shares	Dec. 09, 2020 Installment shares	Dec. 31, 2022 USD ($) ReportingUnit $ / shares shares	Sep. 30, 2022 ReportingUnit	Dec. 31, 2022 USD ($) Customer Days $ / shares shares	Dec. 31, 2021 USD ($) Customer $ / shares shares	Dec. 31, 2020 USD ($) Customer shares	Dec. 31, 2024 USD ($)	Sep. 26, 2022 USD ($)
Summary Of Significant Accounting Policies [Line Items]
Write-offs in capitalized website development costs							$ 165,000
Impairment of long-lived assets							$ 165,000	$ 3,128,000	$ 1,151,000
Description of significant off-balance sheet risk							The Company has no significant off-balance sheet risk, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements.
Investments					$ 0		$ 0
Accounts receivable, net					46,817,000		46,817,000	189,324,000
Amortization (accretion) of premiums or discounts								0	0
Realized gains or losses on investments								0	0
Other than temporary impairments recognized in statements of operations								0	0
Restricted cash					$ 14,615,000		14,615,000	16,336,000
Revenue recognized, accrued income expense and other liabilities							12,784,000	9,137,000
Number of reporting units \| ReportingUnit					4	2
Impairment of goodwill							$ 0	0	0
Payment of revenue, performance obligation, description of payment terms							thirty to sixty days
Costs to obtain a contract					$ 17,394,000		$ 17,394,000	14,912,000
Amortization of deferred contract costs							11,067,000	12,653,000	$ 11,605,000
Guarantee income							10,026,000	5,537,000
Options granted during period \| shares									0
Tax expense related to stock-based compensation							4,181,000	1,179,000
Advertising expense							156,128,000	151,457,000	$ 155,580,000
Sublease income							$ 1,809,000	0
Minimum percentage of tax position realized upon settlement							50.00%
Unrecognized Tax Benefits					598,000		$ 598,000	$ 0
Percentage of corporate alternative minimum tax							15.00%
Minimum average amount of adjusted financial income							$ 1,000,000,000.0
Number of consecutive tax year period							3 years
Percentage of excise tax imposed							1.00%
Federal tax rate							21.00%	21.00%	21.00%
Deferred financing costs					2,442,000		$ 2,442,000	$ 0
Amortization of deferred financing costs							136,000	0	$ 0
Exercise of guarantee net loss							4,568,000
Business acquisition, stock consideration								$ 103,645,000
Subsequent Event
Summary Of Significant Accounting Policies [Line Items]
Stock repurchases excise tax percentage		1.00%
Revolving Credit Facility
Summary Of Significant Accounting Policies [Line Items]
Letter of credit facility					0		0
Revolving Credit Facility \| Letter of Credit Facility
Summary Of Significant Accounting Policies [Line Items]
Letter of credit facility					$ 0		$ 0				$ 50,000,000.0
Restricted Stock Units
Summary Of Significant Accounting Policies [Line Items]
Other than option outstanding \| shares					4,484,291		4,484,291	3,834,322
Stock Options
Summary Of Significant Accounting Policies [Line Items]
Options granted during period \| shares							30,266	619,618	0
Market-based RSU
Summary Of Significant Accounting Policies [Line Items]
Other than option outstanding \| shares					0		0
Car Offer
Summary Of Significant Accounting Policies [Line Items]
Business acquisition, percentage of equity interest acquired			51.00%		51.00%		51.00%	51.00%
Number of days guarantee period \| Days							45
Maximum potential amount of future payments required to make under guarantees					$ 31,056,000		$ 31,056,000	$ 76,075,000
Contingent loss liabilities					$ 0		$ 0	$ 0
Guarantees									$ 0
Business acquisition date			Jan. 14, 2021
Business acquisition, total consideration			$ 173,155,000
Payments to acquire business			69,510,000
Retention pool aggregate amount			8,000,000
Retention pool amount granted to employees			6,000,000
Retention pool amount available for issuance to future employees			2,000,000
Car Offer \| 2022 Call Right
Summary Of Significant Accounting Policies [Line Items]
Business acquisition, option to acquire remaining percentage of interest					25.00%		25.00%
Car Offer \| Scenario Forecast \| 2022 Call Right
Summary Of Significant Accounting Policies [Line Items]
Business acquisition, option to acquire remaining value of interest										$ 100,000,000
Car Offer \| Restricted Stock Units
Summary Of Significant Accounting Policies [Line Items]
Requisite service period							4 years
Car Offer \| Stock Options
Summary Of Significant Accounting Policies [Line Items]
Requisite service period							4 years
Vesting period							10 years
Class A Common Stock
Summary Of Significant Accounting Policies [Line Items]
Common stock, par value \| $ / shares					$ 0.001		$ 0.001	$ 0.001
Class A Common Stock \| Car Offer
Summary Of Significant Accounting Policies [Line Items]
Business acquisition, stock consideration			$ 103,645,000
Business acquisition, stock consideration shares issued \| shares			3,115,282
Business acquisition, share price \| $ / shares			$ 22.51
Trade Accounts Receivable
Summary Of Significant Accounting Policies [Line Items]
Accounts receivable, net					$ 632,000		$ 632,000
Gross trade accounts receivable from receivables in transit from the third-party payment processor					7,122,000		7,122,000	$ 18,747,000
Revenue recognized, accrued income expense and other liabilities								28,075,000
Receivables offset by payments received in advance					6,490,000		$ 6,490,000	$ 46,822,000
Minimum
Summary Of Significant Accounting Policies [Line Items]
Estimated useful lives							3 years
Maximum
Summary Of Significant Accounting Policies [Line Items]
Maturity of certificates of deposit, description							As of December 31, 2021, investments consisted of U.S. certificates of deposit (“CDs”) with remaining maturities of less than twelve months.
Maturity period of certificates of deposit							12 months	12 months
Estimated useful lives							11 years
Maximum \| Car Offer
Summary Of Significant Accounting Policies [Line Items]
Business acquisition valuation period							1 year
Sales Revenue, Net \| Concentration of Credit Risk
Summary Of Significant Accounting Policies [Line Items]
Number of major customers \| Customer							0	0	0
Net Accounts Receivable \| Advertising Customers
Summary Of Significant Accounting Policies [Line Items]
Unbilled accounts receivable					7,150,000		$ 7,150,000	$ 7,356,000
Net Accounts Receivable \| Concentration of Credit Risk
Summary Of Significant Accounting Policies [Line Items]
Number of major customers \| Customer							1	2
Net Accounts Receivable \| Concentration of Credit Risk \| Minimum
Summary Of Significant Accounting Policies [Line Items]
Number of major customers \| Customer							1,000	1,000
Net Accounts Receivable \| Concentration of Credit Risk \| Customer One
Summary Of Significant Accounting Policies [Line Items]
Concentration of credit risk, percentage							13.00%	47.00%
Net Accounts Receivable \| Concentration of Credit Risk \| Customer One \| Minimum
Summary Of Significant Accounting Policies [Line Items]
Concentration of credit risk, percentage							10.00%	10.00%
Net Accounts Receivable \| Concentration of Credit Risk \| Customer Two
Summary Of Significant Accounting Policies [Line Items]
Concentration of credit risk, percentage								18.00%
United States
Summary Of Significant Accounting Policies [Line Items]
Write-offs in capitalized website development costs								$ 2,481,000
Impairment of long-lived assets								647,000
UK
Summary Of Significant Accounting Policies [Line Items]
Federal tax rate							19.00%
UK \| Scenario Forecast
Summary Of Significant Accounting Policies [Line Items]
Federal tax rate	25.00%
Website Development Costs
Summary Of Significant Accounting Policies [Line Items]
Write-offs in capitalized website development costs									$ 1,151,000
Software and website development costs capitalized					14,496,000		$ 14,496,000	8,190,000
Amortization expense							$ 7,637,000	3,705,000	3,324,000
Estimated useful life							3 years
Website Development Costs \| Exit of Certain International Markets
Summary Of Significant Accounting Policies [Line Items]
Write-offs in capitalized website development costs									844,000
Internal Use Software
Summary Of Significant Accounting Policies [Line Items]
Software and website development costs capitalized					4,388,000		$ 4,388,000	2,892,000
Amortization expense							$ 1,286,000	272,000	0
Estimated useful life							3 years
Hosting Arrangements
Summary Of Significant Accounting Policies [Line Items]
Software and website development costs capitalized					$ 3,196,000		$ 3,196,000	3,842,000
Amortization expense							$ 2,117,000	$ 1,761,000	$ 690,000
2020 CO Plan
Summary Of Significant Accounting Policies [Line Items]
Requisite service period							3 years
Vesting description							with one third having vested on January 14, 2022 and one third vesting on each of January 14, 2023 and January 14, 2024, provided that a grantee’s continuous service to CarOffer has not terminated on the applicable vesting date.
Vesting Agreement \| Car Offer
Summary Of Significant Accounting Policies [Line Items]
Business acquisition, percentage of equity interest acquired				51.00%
Vesting number of shares \| shares				432,592
Number of Installment \| Installment				3
Vesting description							with one third having vested on January 14, 2022 and one third vesting on each of January 14, 2023 and January 14, 2024, subject to the terms of the Vesting Agreement.
2021 CO Plan
Summary Of Significant Accounting Policies [Line Items]
Number of shares authorized for issuances \| shares					228,571		228,571
Requisite service period							3 years

Summary of Significant Accounting Policies - Summary of Changes in Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Credit Loss [Abstract]
Balance at Beginning of Period	$ 420	$ 616
Provision	1,769	999	$ 1,930
Write–offs, net of recoveries	(380)	(1,195)
Balance at End of Period	$ 1,809	$ 420	$ 616

Summary of Significant Accounting Policies - Schedule of Estimated Useful Lives of Property and Equipment (Details)	12 Months Ended
	Dec. 31, 2022
Capitalized Equipment
Property Plant And Equipment [Line Items]
Estimated Useful Life	3 years
Capitalized Internal-Use Software
Property Plant And Equipment [Line Items]
Estimated Useful Life	3 years
Capitalized Website Development
Property Plant And Equipment [Line Items]
Estimated Useful Life	3 years
Furniture and Fixtures \| Minimum
Property Plant And Equipment [Line Items]
Estimated Useful Life	3 years
Furniture and Fixtures \| Maximum
Property Plant And Equipment [Line Items]
Estimated Useful Life	5 years
Right-of-Use Assets
Property Plant And Equipment [Line Items]
Estimated Useful Life	Lease term, or asset life if shorter
Leasehold Improvements
Property Plant And Equipment [Line Items]
Estimated Useful Life	Lease term, or asset life if shorter

Summary of Significant Accounting Policies - Weighted Average Assumptions Utilized to Determine Fair Value of Options Granted (Details)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Accounting Policies [Abstract]
Expected volatility	48.03%	50.95%
Risk-free interest rate	1.47%	0.69%
Expected term (in years)	6 years 1 month 9 days	6 years 21 days

Revenue Recognition - Summary of Revenue from Contracts with Customers by Services and Products (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Disaggregation of Revenue [Line Items]
Revenue	$ 1,655,035	$ 951,373	$ 551,451
Marketplace
Disaggregation of Revenue [Line Items]
Revenue	658,771	636,942	$ 551,451
Dealer-to-Dealer
Disaggregation of Revenue [Line Items]
Revenue	320,119	224,831
IMCO
Disaggregation of Revenue [Line Items]
Revenue	$ 676,145	$ 89,600

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

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Revenue Recognition - Additional Information (Details) - USD ($) $ in Thousands	1 Months Ended	2 Months Ended	12 Months Ended
	Jun. 30, 2020	May 31, 2020	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Disaggregation Of Revenue [Line Items]
Performance obligation unsatisfied			$ 7,200
Revenue recognized			$ 12,784	$ 9,137
Marketplace Subscription Revenue
Disaggregation Of Revenue [Line Items]
Decrease in revenue					$ 50,000
All Marketplace Subscriptions
Disaggregation Of Revenue [Line Items]
Percentage fee reduction on marketplace subscription services		50.00%
United States
Disaggregation Of Revenue [Line Items]
Percentage fee reduction on marketplace subscription services	20.00%
Canada
Disaggregation Of Revenue [Line Items]
Percentage fee reduction on marketplace subscription services	20.00%
UK
Disaggregation Of Revenue [Line Items]
Percentage fee reduction on marketplace subscription services	50.00%

Fair Value of Financial Instruments - Schedule of Fair Value Levels, Assets Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments:		$ 90,000
Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments:		$ 90,000
Debt Securities Held To Maturity Type Extensible List		us-gaap:CertificatesOfDepositMember
Total	$ 175,486	$ 247,525
Fair Value, Measurements, Recurring \| Quoted Prices in Active Markets for Identical Assets (Level 1 Inputs)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	175,486	157,525
Fair Value, Measurements, Recurring \| Significant Other Observable Inputs (Level 2 Inputs)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments:		$ 90,000
Debt Securities Held To Maturity Type Extensible List		us-gaap:CertificatesOfDepositMember
Total		$ 90,000
Fair Value, Measurements, Recurring \| Money Market Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:	175,486	157,525
Fair Value, Measurements, Recurring \| Money Market Funds \| Quoted Prices in Active Markets for Identical Assets (Level 1 Inputs)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:	$ 175,486	$ 157,525

Fair Value of Financial Instruments - Additional Information (Details) - USD ($)	Dec. 31, 2022	Dec. 31, 2021
Fair Value Disclosures [Abstract]
Held to maturity fair value	$ 0	$ 90,000,000

Fair Value of Financial Instruments - Schedule of Investments (Details) - USD ($)	Dec. 31, 2022	Dec. 31, 2021
Fair Value Disclosures [Abstract]
Certificates of deposit due in one year or less, Amortized Cost		$ 90,000,000
Held to maturity amortized cost		90,000,000
Certificates of deposit due in one year or less, Estimated Fair Value		90,000,000
Held to maturity fair value	$ 0	$ 90,000,000

Property and Equipment, Net - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 89,096	$ 67,534
Less accumulated depreciation and amortization	(48,968)	(35,324)
Total	40,128	32,210
Capitalized Equipment
Property Plant And Equipment [Line Items]
Property and equipment, gross	7,877	8,349
Capitalized Internal-Use Software
Property Plant And Equipment [Line Items]
Property and equipment, gross	7,429	3,041
Capitalized Website Development
Property Plant And Equipment [Line Items]
Property and equipment, gross	36,369	22,037
Furniture and Fixtures
Property Plant And Equipment [Line Items]
Property and equipment, gross	8,615	8,615
Leasehold Improvements
Property Plant And Equipment [Line Items]
Property and equipment, gross	24,225	24,082
Construction in Progress
Property Plant And Equipment [Line Items]
Property and equipment, gross	4,161	854
Finance Lease Right-of-use Assets
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 420	$ 556

Property and Equipment, Net - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Property Plant And Equipment [Line Items]
Depreciation and amortization excluding amortization of intangible assets and capitalized hosting arrangements	$ 14,618	$ 10,324	$ 8,198
Write-offs in capitalized website development costs	165
Digital Wholesale
Property Plant And Equipment [Line Items]
Write-offs in capitalized website development costs	165
U.S. Marketplace
Property Plant And Equipment [Line Items]
Write-offs in capitalized website development costs		2,481
Other
Property Plant And Equipment [Line Items]
Write-offs in capitalized website development costs			1,151
United States
Property Plant And Equipment [Line Items]
Write-offs in capitalized website development costs		$ 2,481
Capitalized Website Development
Property Plant And Equipment [Line Items]
Increase (decrease) in property and equipment	14,332
Construction in Progress
Property Plant And Equipment [Line Items]
Increase (decrease) in property and equipment	3,307
Capitalized Internal-Use Software
Property Plant And Equipment [Line Items]
Write-offs in capitalized website development costs			1,151
Increase (decrease) in property and equipment	$ 4,388
Capitalized Internal-Use Software \| Exit of Certain International Markets
Property Plant And Equipment [Line Items]
Write-offs in capitalized website development costs			$ 844

Goodwill and Other Intangible Assets - Summary of Changes in Carrying Value of Goodwill (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)
Goodwill [Line Items]
Balance as of December 31, 2021	$ 158,287
Foreign currency translation adjustment	(820)
Balance at December 31, 2022	157,467
U.S. Marketplace \| United States
Goodwill [Line Items]
Balance as of December 31, 2021	12,477
Balance at December 31, 2022	12,477
Digital Wholesale \| International
Goodwill [Line Items]
Balance as of December 31, 2021	130,451
Balance at December 31, 2022	130,451
Other \| International
Goodwill [Line Items]
Balance as of December 31, 2021	15,359
Foreign currency translation adjustment	(820)
Balance at December 31, 2022	$ 14,539

Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

Goodwill and Other Intangible Assets - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Finite-Lived Intangible Assets [Line Items]
Impairment of goodwill	$ 0	$ 0	$ 0
Amortization of intangible assets	$ 30,716,000	$ 30,152,000	$ 1,993,000
Developed Technology
Finite-Lived Intangible Assets [Line Items]
Impairment, Intangible Asset, Finite-Lived, Statement of Income or Comprehensive Income [Extensible Enumeration]		Impairment of Long-Lived Assets to be Disposed of
Wrote off intangible assets		$ 647,000

Goodwill and Other Intangible Assets - Summary of Other Intangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 117,211	$ 117,356
Accumulated Amortization	63,510	32,794
Accumulated Impairment	647	647
Net Carrying Amount	$ 53,054	$ 83,915
Brand
Finite Lived Intangible Assets [Line Items]
Weighted Average Remaining Useful Life (years)	8 years 4 months 24 days	9 years 4 months 24 days
Gross Carrying Amount	$ 32,129	$ 32,274
Accumulated Amortization	7,227	4,206
Net Carrying Amount	$ 24,902	$ 28,068
Customer Relationships
Finite Lived Intangible Assets [Line Items]
Weighted Average Remaining Useful Life (years)	1 year	2 years
Gross Carrying Amount	$ 19,870	$ 19,870
Accumulated Amortization	13,609	7,314
Net Carrying Amount	$ 6,261	$ 12,556
Developed Technology
Finite Lived Intangible Assets [Line Items]
Weighted Average Remaining Useful Life (years)	1 year	2 years
Gross Carrying Amount	$ 65,212	$ 65,212
Accumulated Amortization	42,674	21,274
Accumulated Impairment	647	647
Net Carrying Amount	$ 21,891	$ 43,291

Goodwill and Other Intangible Assets - Summary of Estimated Amortization Expense of Intangible Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
2023	$ 30,141
2024	4,066
2025	3,028
2026	3,028
2027	3,028
Thereafter	9,763
Net Carrying Amount	$ 53,054	$ 83,915

Accrued Expenses, Accrued Income Taxes and Other Current Liabilities and Other Non-Current Liabilities - Schedule of Accrued Expenses, Accrued Income Taxes and Other Current Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Accrued Liabilities, Current [Abstract]
Accrued bonus	$ 11,007	$ 11,777
Accrued tax distributions to redeemable noncontrolling interest holders	16	8,701
Receivables in transit, net of payments received in advance from the third-party payment processor		28,075
Other accrued expenses and other current liabilities	28,170	30,033
Total	$ 39,193	$ 78,586

Accrued Expenses, Accrued Income Taxes and Other Current Liabilities and Other Non-Current Liabilities - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Jan. 14, 2021
Business Acquisition [Line Items]
Decrease in receivables in transit, net of payments received in advance from third-party payment processors	$ 28,075
Decrease in accrued tax distributions to redeemable noncontrolling interest	8,685
Decrease in CO incentive unit and subject unit liability-classified awards	$ 21,095
Car Offer
Business Acquisition [Line Items]
Business acquisition, percentage of interest acquired	51.00%	51.00%	51.00%

Accrued Expenses, Accrued Income Taxes and Other Current Liabilities and Other Non-Current Liabilities - Schedule of Other Non-current Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Payables and Accruals [Abstract]
CO Incentive Unit and Subject Unit liability-classified awards		$ 21,095
Other non-current liabilities	$ 5,301	2,544
Total	$ 5,301	$ 23,639

Debt - Additional Information (Details) - USD ($)		12 Months Ended
Debt - Additional Information (Details) - USD ($)	Sep. 26, 2022	Dec. 31, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Long-term debt outstanding		$ 0	$ 0
Line of credit facility maturity date		Sep. 26, 2027
Revolving Credit Facility
Debt Instrument [Line Items]
Line of credit facility maximum borrowing amount	$ 400,000,000.0
Letter of credit facility		$ 0
Line of credit facility increased in maximum borrowing capacity	$ 250,000,000.0
Increase in borrowing capacity equal to percentage of four quarter EBDITA	100.00%
Minimum \| Revolving Credit Facility
Debt Instrument [Line Items]
Line of credit facility unutilized commitment fee percentage	0.125%
Maximum \| Revolving Credit Facility
Debt Instrument [Line Items]
Line of credit facility unutilized commitment fee percentage	0.175%
Letter of Credit Facility \| Revolving Credit Facility
Debt Instrument [Line Items]
Letter of credit facility	$ 50,000,000.0	$ 0

Commitments and Contingencies - Additional Information (Details)	12 Months Ended
	Dec. 31, 2022 USD ($) Days	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Jan. 14, 2021
Commitments And Contingencies [Line Items]
Lease term description	non-cancellable lease terms through 2033
Sublease term description	non-cancellable lease terms through 2025
Lessee, Operating Lease, Existence of Option to Extend [true false]	true
Operating lease, option to extend	option to extend the lease term up to two additional periods of five years
Sublease option to extend	option to extend the sublease term up to one additional period of three years.
Restricted cash	$ 14,615,000	$ 16,336,000
Lease costs	16,732,000	15,844,000	$ 14,157,000
Sublease income	$ 1,809,000	$ 0
Weighted average remaining lease term	7 years 1 month 6 days	7 years 7 months 6 days
Weighted average discount rate	4.90%	5.30%
Estimated future minimum lease payments not yet commenced	$ 246,492,000
Guarantee income	10,026,000	$ 5,537,000
Exercise of guarantee net loss	$ 4,568,000
Boston, Massachusetts at 1001 Boylston St
Commitments And Contingencies [Line Items]
Lease commencement date	2023-02
Lessee, Operating Lease, Existence of Option to Extend [true false]	true
Operating lease, option to extend	options to extend the lease term for two additional periods of five years
Detroit Michigan
Commitments And Contingencies [Line Items]
Lease commencement date	2023-02
Car Offer
Commitments And Contingencies [Line Items]
Business acquisition, percentage of equity interest acquired	51.00%	51.00%		51.00%
Guarantees, description	provides certain guarantees to dealers through products such as its 45-Day Guarantee and OfferGuard service offerings on the CarOffer platform, which are accounted for under ASC Topic 460, Guarantees.
Number of days guarantee period \| Days	45
Maximum potential amount of future payments required to make under guarantees	$ 31,056,000	$ 76,075,000
Contingent loss liabilities	$ 0	$ 0
Guarantees			$ 0
Car Offer \| Call Option [Member]
Commitments And Contingencies [Line Items]
Business acquisition, option to acquire remaining percentage of interest	25.00%

Commitments and Contingencies - Summary of Future Minimum Lease Payments (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Operating Lease Commitments
2023	$ 17,841
2024	15,499
2025	7,154
2026	6,344
2027	6,463
Thereafter	29,058
Total lease payments	82,359
Less imputed interest	(15,941)
Total	$ 66,418

Commitments and Contingencies - Summary of Contractual Obligations (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Contractual obligations
Total	$ 328,851
Less than 1 year	17,960
1 to 3 years	34,645
3 to 5 years	45,076
More than 5 years	231,170
Operating Lease Obligations
Contractual obligations
Total	328,851
Less than 1 year	17,960
1 to 3 years	34,645
3 to 5 years	45,076
More than 5 years	$ 231,170

Commitment and Contingencies - Schedule of Future Minimum Sublease Income Payments (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2023	$ 2,167
2024	1,947
2025	1,023
Total	$ 5,137

Stock-based Compensation - Additional Information (Details) - USD ($)

12 Months Ended

Jan. 03, 2023

Jan. 03, 2022

Aug. 22, 2016

Aug. 15, 2015

Jun. 26, 2015

Dec. 31, 2022

Dec. 31, 2021

Dec. 31, 2020

Dec. 08, 2022

Oct. 16, 2017

Jun. 21, 2017

Dec. 31, 2006

Number of options granted in period

Aggregate intrinsic value for options exercised

$ 6,027,000

Capitalized website development and internal-use software costs excluded from stock-based compensation expense

$ 33,682,000

77,710,000

$ 45,321,000

4,468,000

3,247,000

1,906,000

Income tax benefit from stock-based compensation expense

5,441,000

5,301,000

4,796,000

Total payments for employees' tax obligations to taxing authorities due to net share settlements and cashless exercises of options

$ 16,022,000

$ 15,388,000

$ 11,184,000

Remaining number of authorized shares repurchased

231,309

Number of shares repurchased and retired

1,350,473

Share repurchased and retired, value

$ 18,691,000

Share repurchased and retired at average cost price per share

$ 13.84

Stock Options

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

Number of options granted in period

30,266

619,618

Aggregate intrinsic value for options exercised

$ 3,774,000

^[1]

$ 8,401,000

Unrecognized stock-based compensation expense related to unvested stock options

$ 5,173,000

Unrecognized stock-based compensation expense, expected period for recognition

2 years 2 months 12 days

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

$ 2,553,000

$ 2,471,000

$ 17,000

RSUs

Number of units granted in period

2,784,845

Unvested units

4,484,291

3,834,322

Weighted average grant date fair value of RSUs granted

$ 28.94

$ 33.83

$ 28.47

Number of RSUs vested and settled during period

1,575,206

1,347,464

Total fair value of RSUs vested

$ 52,423,000

$ 40,613,000

Unrecognized stock-based compensation expense related to RSUs

$ 110,444,000

Unrecognized stock-based compensation expense, expected period for recognition

2 years 8 months 12 days

Number of units vested in period

$ 52,224,000

52,916,000

$ 45,304,000

1,649,294

Number of units forfeited in period

485,582

CO Incentive Units and Subject Units

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

Decrease in stock-based compensation expense

$ 43,418,000

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

$ (21,095,000)

$ 22,323,000

Class A Common Stock

Employee tax withholding requirements and option costs due to net share settlement

566,267

527,237

447,160

Class A Common Stock | Maximum

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

Aggregate share repurchase price

$ 250,000,000

2020 CO Plan | Incentive Units

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

Number of units granted in period

485,714

Number of shares available for issuance during period

Accelerated and redeemed units

142,857

Unvested units

342,857

Unrecognized stock based compensation expense related to unvested units

$ 0

Number of units vested in period

$ 1,229,000

Number of units forfeited in period

2020 CO Plan | Subject Units

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

Unrecognized stock based compensation expense related to unvested units

$ 0

Vesting Agreement | Subject Units

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

Stock options, granted

Number of shares available for issuance during period

Units issued and unvested

288,395

432,592

Number of units vested in period

144,197

Number of units forfeited in period

2021 CO Plan

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

2021 CO Plan | Incentive Units

228,571

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

Number of shares available for issuance during period

228,571

228,571

2006 Plan

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

Stock options, granted

Number of units granted in period

2006 Plan | Class B Common Stock

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

3,444,668

2015 Plan

Term of authorized shares

603,436

10 years

Award expiration date

Aug. 21, 2026

Equity Incentive Plan, plan modification, description and terms

(1) the number of shares of Class A common stock was increased, on a share for share basis, by the number of shares of Class B common stock that were (a) subject to outstanding options granted under the 2006 Plan that expired, terminated, or were canceled for any reason without having been exercised, (b) surrendered in payment of the exercise price of outstanding options granted under the 2006 Plan or (c) withheld in satisfaction of tax withholding upon exercise of outstanding options granted under the 2006 Plan, and the number of shares of Class B common stock reserved under the amended and restated 2015 Plan was decreased, on a corresponding share for share basis, (2) no new awards of Class B common stock could be granted under the amended and restated 2015 Plan, and (3) except with respect to outstanding options granted under the 2006 Plan that were exercised on or after the date of the amendment and restatement, no Class B common stock could be issued under the 2015 Plan.

2015 Plan | Class B Common Stock

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

5,161,644

2015 Plan | Class B Common Stock | Stock Options

802,562

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

2015 Plan | Class B Common Stock | RSUs

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

2015 Plan | Class A Common Stock

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

3,181,740

2015 Plan | Class A Common Stock | Stock Options

618,691

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

2015 Plan | Class A Common Stock | RSUs

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

2017 Plan

Equity incentive plan, issuance of additional shares, description and terms

4,070,921

6,000,000

Unless determined otherwise by the Compensation Committee of the Board, as of the first trading day of January of each calendar year during the term of the 2017 Plan (excluding any extensions), eligible beginning with calendar year 2019, an additional number of shares of Class A common stock will be added to the number of shares of the Company’s Class A common stock authorized to be issued or transferred under the 2017 Plan and the number of shares authorized to be issued or transferred pursuant to incentive stock options, equal to 4% of the total number of shares of Class A common stock outstanding on the last trading day in December of the immediately preceding calendar year, or 6,000,000 shares, whichever is less, or such lesser amount as determined by the Board (the “Evergreen Increase”). The Compensation Committee of the Board determined to not effectuate the Evergreen Increase that was otherwise scheduled to have occurred on each of January 2, 2019, January 2, 2020 and January 4, 2021. On January 3, 2022, an additional 4,070,921 shares of the Company's Class A Common Stock was authorized to be issued or transferred under the 2017 Plan pursuant to the Evergreen Increase. On January 3, 2023, an additional 4,065,466 shares of the Company's Class A Common Stock was authorized to be issued or transferred under the 2017 Plan pursuant to the Evergreen Increase.

2017 Plan | Subsequent Event

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

2017 Plan | Class A Common Stock

4,065,466

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

Equity incentive plan, additional shares authorized percentage

4.00%

Number of shares available for issuance during period

4,939,416

2017 Plan | Class A Common Stock | Maximum

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

2017 Plan | Class A Common Stock | Awarded Under 2017 Plan

12,300,000

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

2017 Plan | Class A Common Stock | Awarded Under 2015 Plan

7,800,000

Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]

Options granted during period

4,500,000

[1]

Stock-based Compensation - Summary of Stock Option Activity (Details) - USD ($)
$ / shares in Units, $ in Thousands

12 Months Ended

Dec. 31, 2022

Dec. 31, 2021

Dec. 31, 2020

Common Stock

Aggregate Intrinsic Value

Outstanding, December 31, 2021

$ 6,027

Stock Options

Common Stock

949,307

Options granted during period

30,266

619,618

Outstanding, December 31, 2022

(131,061)

Forfeited or Expired

(21,903)

826,609

949,307

Weighted-Average Exercise Price for Equity

485,092

Unexercisable and exercisable outstanding, Beginning balance

$ 22.42

Granted

35.00

Unexercisable and exercisable outstanding, Ending balance

5.51

Forfeited or Expired

35.61

25.22

$ 22.42

Unexercisable and exercisable outstanding,

$ 17.81

6 years 2 months 12 days

6 years 8 months 12 days

Unexercisable and exercisable outstanding, Beginning balance

4 years 9 months 18 days

Aggregate Intrinsic Value

^[1]

$ 11,877

Unexercisable and exercisable outstanding, Ending balance

3,774

^[1]

$ 8,401

^[1]

3,172

$ 11,877

^[1]

$ 3,172

[1]

Stock-based Compensation - Summary of Restricted Stock Unit Activity (Details) - RSUs - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Number of Shares
Unvested outstanding, beginning balance	3,834,322
Granted	2,784,845
Vested	(1,649,294)
Forfeited	(485,582)
Unvested outstanding, ending balance	4,484,291	3,834,322
Weighted-Average Grant Date Fair Value
Unvested outstanding, beginning balance	$ 33.02
Granted	28.94	$ 33.83	$ 28.47
Vested	33.43
Forfeited	32.71
Unvested outstanding, ending balance	$ 29.36	$ 33.02
Aggregate Intrinsic Value
Unvested outstanding, balance	$ 62,825	$ 128,987

Stock-based Compensation - Summary of Stock-based Compensation Expense by Award Type (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total	$ 33,682	$ 77,710	$ 45,321
Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total	2,553	2,471	17
Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total	52,224	52,916	$ 45,304
CO Incentive Units and Subject Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total	$ (21,095)	$ 22,323

Stock-based Compensation - Summary of Allocation of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total	$ 33,682	$ 77,710	$ 45,321
Cost of Revenue
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total	475	417	293
Sales and Marketing Expense
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total	7,733	12,801	10,564
Product, Technology, and Development Expense
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total	20,266	22,289	20,741
General and Administrative Expense
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total	$ 5,208	$ 42,203	$ 13,723

Stock-based Compensation - Summary of Shares of Common Stock Reserved for Future Issuance (Details) - Class A Common Stock	Dec. 31, 2022 shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares of authorized common stock reserved for future issuance	10,250,316
Stock Options Outstanding
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares of authorized common stock reserved for future issuance	826,609
Unvested restricted stock units outstanding
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares of authorized common stock reserved for future issuance	4,484,291
2017 Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares of authorized common stock reserved for future issuance	4,939,416

Earnings Per Share - Additional Information (Details)	12 Months Ended
Earnings Per Share - Additional Information (Details)	Dec. 31, 2022 Vote shares	Dec. 31, 2021 shares	Dec. 31, 2020 shares
Earnings Per Share Basic [Line Items]
Conversion of stock, description	Each share of Class B common stock is convertible into one share of Class A common stock at the option of the holder at any time or automatically upon certain events described in the Company’s amended and restated certificate of incorporation, including upon either the death or voluntary termination of the Company’s Executive Chairman.
Undistributed earnings ratio used to calculate allocation to class of stock	100.00%
Market Based Performance Award RSU
Earnings Per Share Basic [Line Items]
Potentially dilutive common stock equivalents excluded from calculation of diluted weighted-average shares outstanding	0	14,682
Class A Common Stock
Earnings Per Share Basic [Line Items]
Right to voting	one vote per share
Number of votes entitled to stockholders per share \| Vote	1
Conversion of stock	0	3,077,327	1,238,144
Class B Common Stock
Earnings Per Share Basic [Line Items]
Right to voting	ten votes per share
Number of votes entitled to stockholders per share \| Vote	10
Class of share converted to another class	one share of Class A common stock
Conversion of stock	1

Earnings Per Share - Schedule of Reconciliation of Numerator and Denominator Used in Calculation of Basic and Diluted Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Numerator:
Consolidated net income	$ 78,954	$ 110,373	$ 77,553
Net (loss) income attributable to redeemable noncontrolling interest	(5,433)	1,129
Accretion of redeemable noncontrolling interest to redemption value	(109,398)	109,398
Net income (loss) attributable to common stockholders - basic	193,785	(154)	77,553
Net (loss) income attributable to redeemable noncontrolling interest	(5,433)
Net income (loss) attributable to common stockholders - diluted	$ 78,954	$ (154)	$ 77,553
Weighted average number of shares of common stock used in computing net income (loss) per share attributable to common stockholders
Weighted-average number of shares of common stock used in computing net income (loss) per share attributable to common stockholders - basic	118,474,991	117,142,062	112,854,524
Dilutive effect of share equivalents resulting from stock options	275,330		674,018
Dilutive effect of share equivalents resulting from unvested restricted stock units	366,258		321,273
Dilutive effect of share equivalents resulting from CarOffer incentive units and noncontrolling interest	9,034,395
Weighted-average number of shares of common stock used in computing net income (loss) per share attributable to common stockholders - diluted	128,150,974	117,142,062	113,849,815
Net income (loss) per share attributable to common stockholders:
Basic	$ 1.64	$ 0.00	$ 0.69
Diluted	$ 0.62	$ 0.00	$ 0.68

Earnings Per Share - Schedule of Potentially Dilutive Common Stock Equivalents Excluded from Calculation of Diluted Weighted-average Shares Outstanding (Details) - shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Stock Options Outstanding
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Potentially dilutive common stock equivalents excluded from calculation of diluted weighted-average shares outstanding	587,494	617,504
Restricted Stock Units Outstanding
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Potentially dilutive common stock equivalents excluded from calculation of diluted weighted-average shares outstanding	2,634,463	2,867,330	2,722,226
Co Incentive Units Subject Units and noncontrolling interest
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Potentially dilutive common stock equivalents excluded from calculation of diluted weighted-average shares outstanding		1,509,750

Income Taxes - Schedule of Domestic and Foreign Components of Income Before Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest [Abstract]
United States	$ 110,213	$ 148,037	$ 97,120
Foreign	1,149	1,323	1,990
Income before income taxes	$ 111,362	$ 149,360	$ 99,110

Amount of income (loss) from continuing operations, including income (loss) from equity method investments, before deduction of income tax expense (benefit), and income (loss) attributable to noncontrolling interest.

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Income Taxes - Schedule of Provision for (Benefit from) Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Current provision (benefit):
Federal	$ 43,207	$ 22,133	$ (3,733)
State	11,140	10,438	2,288
Foreign	175	253	767
Current (benefit) provision	54,522	32,824	(678)
Deferred provision (benefit):
Federal	(20,278)	5,698	19,539
State	(1,789)	669	2,734
Foreign	(47)	(204)	(38)
Deferred provision (benefit)	(22,114)	6,163	22,235
Income tax provision (benefit)	$ 32,408	$ 38,987	$ 21,557

Income Taxes - Schedule of Effective Tax Rates (Details)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Effective Income Tax Rate Reconciliation, Percent [Abstract]
U.S. federal taxes at statutory rate	21.00%	21.00%	21.00%
State taxes, net of federal benefit	7.70%	7.50%	6.20%
Nondeductible expenses	0.50%	0.30%	0.40%
Stock compensation	2.80%	0.30%	0.20%
Foreign rate differential	(0.10%)	(0.20%)	(0.20%)
Federal and state credits	(4.70%)	(2.60%)	(3.20%)
CARES Act			(2.40%)
Disallowed officer compensation	0.80%	1.00%
Investment in partnership	1.00%	(0.30%)
Federal, state, and foreign provision to return differences	(0.80%)	(0.70%)
Uncertain tax provision	0.50%
Other	(0.00%)	(0.20%)	(0.20%)
Consolidated effective tax rate	28.70%	26.10%	21.80%
Effective tax rate attributable to redeemable noncontrolling interest	(1.00%)	0.20%
Effective tax rate attributable to CarGurus, Inc	27.70%	26.30%	21.80%

Income Taxes - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Line Items]
Effective tax rate attributable to CarGurus, Inc	27.70%	26.30%	21.80%
Change in valuation allowance	$ 29,000	$ 71,000
Deferred tax assets, federal net operating loss carryforwards	821,000
Deferred tax assets, state net operating loss carryforwards	$ 4,051,000
Percentage of annual limitation of taxable income	80.00%
Liabilities for uncertain tax positions	$ 598,000	$ 0
Federal
Income Tax Disclosure [Line Items]
Tax credit carryforwards	$ 673,000
State
Income Tax Disclosure [Line Items]
Operating loss carryforwards expiration year	2040
Tax credit carryforwards	$ 322,000
Internal Revenue Service (IRS)
Income Tax Disclosure [Line Items]
Tax credit carryforward limitations on use, cumulative ownership change, period	3 years
Tax credit carryforward, limitations on use	an ownership change, as defined by Section 382, results from transactions that increase the ownership of 5% stockholders in the stock of a corporation by more than 50% in the aggregate over a three-year period.
Open tax year	2018
Internal Revenue Service (IRS) \| Maximum
Income Tax Disclosure [Line Items]
Tax credit carryforward limitations on use, cumulative ownership change percentage	50.00%
Revenue Commissioners, Ireland \| Foreign
Income Tax Disclosure [Line Items]
Open tax year	2016

Income Taxes - Schedule of Income Tax Effect of Each Type of Temporary Difference and Carryforward (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Deferred tax assets:
Net operating loss carryforwards	$ 461	$ 1,429
Credit carryforwards	928	4,241
Stock-based compensation	5,441	5,301
Lease liability	13,557	15,640
Investment in partnership	8,325	6,709
Accruals and reserves	3,770	5,942
Capitalized research and development	25,342
Deferred tax assets	57,824	39,262
Valuation Allowance	(258)	(229)
Valuation Allowance, net	57,566	39,033
Deferred tax liabilities:
Prepaid expenses	(2,466)	(1,850)
Deferred commissions	(4,200)	(3,508)
Right of use assets	(11,237)	(12,955)
Intangible assets	(733)	(1,111)
Property and equipment	(3,496)	(6,289)
Deferred tax liability	(22,132)	(25,713)
Net deferred tax assets	$ 35,434	$ 13,320

Income Taxes - Schedule of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns Roll Forward (Details)	12 Months Ended
	Dec. 31, 2022 USD ($)
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Balance	$ 0
Increase related to current year tax provisions	198,000
Increase related to prior years' tax provision	400,000
Balance	$ 598,000

Segment and Geographic Information - Additional Information (Details) $ in Thousands	3 Months Ended	9 Months Ended	12 Months Ended
	Dec. 31, 2022 USD ($) Segment	Sep. 30, 2022 Segment	Dec. 31, 2021 USD ($) Segment	Dec. 31, 2020 USD ($)
Segment Reporting Information [Line Items]
Number of reportable segments \| Segment	2	1	2
Assets	$ 927,102		$ 931,574	$ 502,298
Goodwill	$ 157,467		$ 158,287

Sum of the carrying amounts as of the balance sheet date of all assets that are recognized. Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.

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Segment and Geographic Information - Summary of Segment Revenue, Income (Loss) and Depreciation and Amortization (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Segment Reporting Information [Line Items]
Total Revenue	$ 1,655,035	$ 951,373	$ 551,451
Income (Loss) from Operations	108,478	148,268	97,756
Depreciation and Amortization	45,334	40,476	11,342
U.S. Marketplace
Segment Reporting Information [Line Items]
Total Revenue	614,136	594,602	519,835
Income (Loss) from Operations	125,796	151,343	120,836
Depreciation and Amortization	14,214	11,313	9,456
Digital Wholesale
Segment Reporting Information [Line Items]
Total Revenue	996,264	314,431
Income (Loss) from Operations	(9,174)	7,189
Depreciation and Amortization	30,690	28,394
Other
Segment Reporting Information [Line Items]
Total Revenue	44,635	42,340	31,616
Income (Loss) from Operations	(8,144)	(10,264)	(23,080)
Depreciation and Amortization	$ 430	$ 769	$ 1,886

Segment and Geographic Information - Summary of Reconciliation Between Segment Income from Operations (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Segment Reporting [Abstract]
Total segment income from operations	$ 108,478	$ 148,268	$ 97,756
Other income, net	2,884	1,092	1,354
Income before income taxes	$ 111,362	$ 149,360	$ 99,110

Segment and Geographic Information - Summary of Assets by Segment (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Segment Reporting Information [Line Items]
Total assets	$ 927,102	$ 931,574	$ 502,298
U.S. Marketplace
Segment Reporting Information [Line Items]
Total assets	531,118	453,837	470,286
Digital Wholesale
Segment Reporting Information [Line Items]
Total assets	352,274	442,216
Other
Segment Reporting Information [Line Items]
Total assets	$ 43,710	$ 35,521	$ 32,012

Segment and Geographic Information - Summary of Revenue by Geographical Region (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Revenue by Geographic Region:
Total Revenue	$ 1,655,035	$ 951,373	$ 551,451
United States
Revenue by Geographic Region:
Total Revenue	1,610,400	909,033	519,835
International
Revenue by Geographic Region:
Total Revenue	$ 44,635	$ 42,340	$ 31,616