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United States securities and exchange commission logo
September 20, 2022
Jason Trevisan
Chief Executive Officer
CarGurus, Inc.
2 Canal Park
4th Floor
Cambridge, MA 02141
Re: CarGurus, Inc.
Form 10-K for the
Fiscal Year Ended December 31, 2021
Filed February 25,
2022
Form 10-Q for the
Quarterly Period Ended June 30, 2022
Filed August 8,
2022
Form 8-K Furnished
August 8, 2022
File No. 001-38233
Dear Mr. Trevisan:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comments. In some of our comments, we
may ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 10-K for the Fiscal Year Ended December 31, 2021
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Critical Accounting Estimates, page 55
1. Your Critical
Accounting Estimates appear to repeat your accounting policy disclosures in
Note 2. Please revise
to explain why each critical accounting estimate is subject to
uncertainty and, to the
extent the information is material and reasonably available, how
much each estimate
and/or assumption has changed over a relevant period, and the
sensitivity of the
reported amounts to the material methods, assumptions and estimates
underlying its
calculation. Refer to Item 303(b)(3) of Regulation S-K.
Jason Trevisan
FirstName LastNameJason Trevisan
CarGurus, Inc.
Comapany 20,
September NameCarGurus,
2022 Inc.
September
Page 2 20, 2022 Page 2
FirstName LastName
Notes to Consolidated Financial Statements
Note 2. Summary of Significant Accounting Policies
Concentration of Credit Risk, page 76
2. You state that credit risk with respect to accounts receivable is
dispersed due to the large
number of customers. However, you also state that at December 31,
2021, two customers
together accounted for 65% of net accounts receivable. Please explain
this apparent
inconsistency or revise as necessary in future filings.
Accounts Receivable and Allowance for Doubtful Accounts, page 78
3. You state that the company offsets gross trade accounts receivable
with payments
received in advance from a third-party processor, which appears to
imply that the advance
payments are netted against your accounts receivable asset account.
However, you also
state that trade accounts related to receivables in transit from the
third-party payment
processor were offset by payments received in advance and resulted in
a net liability.
Please explain this apparent inconsistency and revise as necessary to
clarify in future
filings.
Form 10-Q for the Quarterly Period Ended June 30, 2022
Note 11 Segment and Geographic Information, page 15
4. We note that during the first quarter of fiscal 2022, you changed from
two reportable
segments to one as your chief operating decision maker (CODM) now
assesses the
company s performance on a consolidated basis. However, you refer to
the CarOffer
business throughout your filings and state that it is evaluated
separately. Further,
during your August 2, 2022 earnings call and in the Second Quarter
2022 Financial
Results Presentation (Q2 Investor Presentation), you provide financial
results that includes
GAAP revenue, GAAP gross profit, non-GAAP gross profit and non-GAAP
profit margin
for total CarOffer, Dealer-to-Dealer and Instant Max Cash Offer
(IMCO), as well as
Adjusted EBITDA for CarOffer. Considering these disclosures and the
financial
information presented and discussed, please provide us with a detailed
analysis of how
you considered the guidance ASC 280-10-50 in determining that you have
one reportable
segment. As part of your response:
Provide us with an organization chart together with a narrative
that describes your
management structure.
Describe the role of each of the individuals who report to the
CODM.
Tell us how often the CODM meets with his direct reports, the
financial information
he reviews in conjunction with those meetings, the financial
information discussed
and who else attends such meetings.
Describe the various forms of discrete financial information
regularly reviewed by
your CODM, if any, that is at a disaggregated or lower level than
your consolidated
results.
Jason Trevisan
FirstName LastNameJason Trevisan
CarGurus, Inc.
Comapany 20,
September NameCarGurus,
2022 Inc.
September
Page 3 20, 2022 Page 3
FirstName LastName
Explain how budgets are prepared, who approves the budget at
each step of the
process, the level of detail discussed at each step, and the
level at which the CODM
makes changes to the budget.
Describe the basis for determining the compensation for each
individual that reports
to the CODM.
To the extent you have aggregated certain operating segments
into a single reportable
segment, explain how you determined that aggregation is
appropriate.
5. In addition, we refer to your measures of Dealer-to-Dealer, IMCO, and
CarOffer non-
GAAP gross profit and non-GAAP gross profit margin, as well as
CarOffer non-GAAP
net income and adjusted EBITDA included in the Q2 2022 Investor
Presentation. Please
tell us how each of these measures are reconciled to the most directly
comparable GAAP
amounts, particularly considering you have only one reportable
segment. Refer to Item
100(a)(1) of Regulation G.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Company Overview, page 17
6. We note your reference to Dealer-to-Dealer and IMCO throughout your
August 2, 2022
earnings call and in the Q2 2022 Investor Presentation. Please tell us
how these offerings
relate to the three revenue sources discussed in your Form 10-Q and
10-K filings. Also,
explain to us why you use different terminology and alternative
financial information in
your investor presentations and tell us your consideration to
incorporate such information
in your filings to the extent it provides a better understanding of
how you organize
your offerings and analyze your business.
Key Business Metrics, page 18
7. You disclose that the metrics presented exclude CarOffer because you
believe such
measures are not applicable for the CarOffer business or do not
provide a meaningful way
to evaluate the CarOffer business. Please clarify what revenue sources
are considered part
of the CarOffer business and tell us what metrics management
uses to evaluate the
CarOffer business. In this regard, we note that you present CarOffer
enrolled dealers,
CarOffer total transactions and CarOffer Gross Merchandise Sales in
the Q2 2022
Investor Presentation. Please revise to include these and/or any other
key performance
indicators that are necessary for an understanding and evaluation the
CarOffer business.
Refer to SEC Release 33-10751.
Form 8-K Furnished on August 8, 2022
Exhibit 99.1, page 11
8. We note your reconciliation of GAAP expense to non-GAAP expense
includes a "total
expenses" line item, which excludes certain GAAP expenses such as
other expenses and
income taxes. Please revise to exclude such total from your
reconciliation or rename this
Jason Trevisan
CarGurus, Inc.
September 20, 2022
Page 4
line item to better describe what it represents (e.g. total cost of
revenue and operating
expenses).
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
You may contact Melissa Kindelan, Senior Staff Accountant, at (202)
551-3564 or
Kathleen Collins, Accounting Branch Chief, at (202) 551-3499 with any
questions.
Sincerely,
FirstName LastNameJason Trevisan
Division of
Corporation Finance
Comapany NameCarGurus, Inc.
Office of
Technology
September 20, 2022 Page 4
cc: Javier Zamora
FirstName LastName