8-K
false000149425900014942592023-05-092023-05-09

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

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

Date of Report (Date of earliest event reported): May 9, 2023

CarGurus, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

Delaware

001-38233

04-3843478

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

 

2 Canal Park, 4th Floor

Cambridge, Massachusetts 02141

(Address of Principal Executive Offices)

(Zip Code)

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

Not Applicable

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

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

 

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

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

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

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

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

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Class A Common Stock,
par value $0.001 per share

 

CARG

 

The Nasdaq Stock Market LLC
(Nasdaq Global Select Market)

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

Emerging growth company

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

 

 

 


 

Item 2.02 Results of Operations and Financial Condition.

On May 9, 2023, CarGurus, Inc. (the “Company”) announced its financial results for the quarter ended March 31, 2023. The full text of the press release issued by the Company in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

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

 

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit

No.

Description

99.1

Press Release of CarGurus, Inc. dated May 9, 2023, reporting its financial results for the quarter ended March 31, 2023, furnished hereto.

104

 

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

 

 


 

SIGNATURES

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

 

CARGURUS, INC.

Date: May 9, 2023

By:

/s/ Jason Trevisan

Name: Jason Trevisan

Title: Chief Executive Officer

 

 


EX-99

 

Exhibit 99.1

https://cdn.kscope.io/b8cf215fde23e17f3b25c7e179c40ff8-img239243378_0.jpg 

 

CarGurus Announces First Quarter 2023 Results

First Quarter Highlights:

Total revenue of $232.0 million
GAAP operating income of $14.1 million; non-GAAP operating income of $36.6 million
GAAP consolidated net income of $11.9 million; non-GAAP consolidated net income of $29.0 million
GAAP net income attributable to common stockholders of $16.1 million; non-GAAP net income attributable to common stockholders of $30.3 million
Cash and cash equivalents of $456.7 million and an available $399.3 million under its revolving credit facility
Consolidated Adjusted EBITDA, a non-GAAP metric, of $40.8 million; Adjusted EBITDA, a non-GAAP metric, of $41.5 million

CAMBRIDGE, MA: May 9, 2023 — CarGurus, Inc. (Nasdaq: CARG), a multinational, online automotive platform for buying and selling vehicles, today announced financial results for the first quarter ended March 31, 2023.

“We have made tremendous progress in becoming the #1 digital destination for consumers and dealers to confidently and conveniently buy and sell any vehicle, anywhere, with the best selection and price,” said Jason Trevisan, Chief Executive Officer at CarGurus. “Our foundational Listings business continues to exhibit resiliency and strong profitability, and progress in optimizing our CarOffer operations this quarter demonstrates our agility in responding promptly and effectively to build a sustainable business that produces a path to profitability. We are proud that our strong execution allowed us to exceed our forecasted guidance range for the first quarter.”

Revenue

Total revenue was $232.0 million, a decrease of (46)% compared to $430.6 million in the first quarter of 2022.
Marketplace revenue was $167.1 million, an increase of 2% compared to $163.3 million in the first quarter of 2022.
Wholesale revenue was $25.2 million, a decrease of (72)% compared to $91.0 million in the first quarter of 2022.
Product revenue was $39.7 million, a decrease of (78)% compared to $176.3 million in the first quarter of 2022.

Operating Income

GAAP operating income was $14.1 million, a decrease of (47)% compared to $26.7 million in the first quarter of 2022.
Non-GAAP operating income was $36.6 million, a decrease of (41)% compared to $62.2 million in the first quarter of 2022.

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

GAAP consolidated net income was $11.9 million, a decrease of (37)% compared to $18.8 million in the first quarter of 2022.

 


 

Non-GAAP consolidated net income was $29.0 million, a decrease of (38)% compared to $46.5 million in the first quarter of 2022.
GAAP net income (loss) attributable to common stockholders was $16.1 million, or $0.10 per fully diluted share, an increase of 126% compared to $(62.1) million, or $(0.53) per fully diluted share, in the first quarter of 2022.
Non-GAAP net income attributable to common stockholders was $30.3 million, or $0.26 per fully diluted share, a decrease of (23)% compared to $39.4 million, or $0.33 per fully diluted share, in the first quarter of 2022.
Consolidated Adjusted EBITDA, a non-GAAP metric, was $40.8 million, a decrease of (38)% compared to $65.7 million in the first quarter of 2022.
Adjusted EBITDA, a non-GAAP metric, was $41.5 million, a decrease of (28)% compared to $58.0 million in the first quarter of 2022.

Balance Sheet and Cash Flow

As of March 31, 2023, CarGurus had cash and cash equivalents of $456.7 million and $399.3 million available under its revolving credit facility.
CarGurus generated $66.3 million in GAAP cash from operations and $60.5 million in free cash flow, a non-GAAP metric, in the first quarter of 2023, compared to having generated $93.1 million in GAAP cash from operations and $89.3 million in free cash flow, a non-GAAP metric, in the first quarter of 2022.

First Quarter Business Metrics(1)(2)(3)

U.S. Marketplace segment revenue was $155.6 million in the first quarter of 2023, an increase of 2% compared to $151.9 million in the first quarter of 2022.
U.S. Marketplace segment operating income was $26.5 million, a decrease of (11)% compared to $29.8 million in the first quarter of 2022.
Digital Wholesale segment revenue was $64.8 million in the first quarter of 2023, a decrease of (76)% compared to $267.3 million in the first quarter of 2022.
Digital Wholesale segment operating loss was $(11.2) million, an increase of 432% compared to $(2.1) million in the first quarter of 2022.
Total paying dealers were 31,291 at March 31, 2023, an increase of 1% compared to 30,867 at March 31, 2022. Of the total paying dealers at March 31, 2023, U.S. and International accounted for 24,394 and 6,897, respectively, compared to 24,219 and 6,648, respectively, at March 31, 2022.
Quarterly Average Revenue per Subscribing Dealer (“QARSD”) in the U.S. was $5,943 as of March 31, 2023, an increase of 4% compared to $5,713 as of March 31, 2022.
QARSD in International markets was $1,550 as of March 31, 2023 compared to $1,556 as of March 31, 2022.
Website traffic and consumer engagement metrics for the first quarter of 2023 were as follows:
U.S. average monthly unique users were 32.0 million, an increase of 3% compared to 31.1 million in the first quarter of 2022.
U.S. average monthly sessions were 84.3 million, a decrease of (1)% compared to 84.9 million in the first quarter of 2022.
International average monthly unique users were 7.2 million, an increase of 5% compared to 6.9 million in the first quarter of 2022.

 


 

International average monthly sessions were 16.7 million, an increase of 5% compared to 15.8 million in the first quarter of 2022.
Transactions were 17,505, a decrease of (75)% compared to 68,754 in the first quarter of 2022.

 

(1)
CarOffer website is excluded from the metrics presented for users and sessions.
(2)
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. 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 chief operating decision maker ("CODM") to assess the business. The CODM reviews segment revenue and segment income (loss) from operations as a proxy for the performance of the Company’s operations. The U.S. Marketplace segment derives revenues from marketplace services from customers within the United States. The Digital Wholesale segment derives revenues from Dealer-to-Dealer and Instant Max Cash Offer 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.
(3)
For the year ended December 31, 2022, Digital Wholesale segment income (loss) from operations did not reflect certain Dealer-to-Dealer and IMCO related capitalized website development amortization incurred by the U.S. Marketplace segment. During the three months ended March 31, 2023, the Company updated Digital Wholesale segment income (loss) from operations to reflect certain Dealer-to-Dealer and IMCO related capitalized website development amortization incurred by the U.S. Marketplace segment and accordingly updated Digital Wholesale segment income (loss) from operations for the three months ended March 31, 2022 for comparative purposes.

Second Quarter 2023 Guidance

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

Total revenue

$220 million to $240 million

Product revenue

$26 million to $36 million

Non-GAAP Consolidated Adjusted EBITDA

$34 million to $42 million

Non-GAAP EPS

$0.22 to $0.25

The second quarter 2023 non-GAAP EPS calculation assumes 114.5 million diluted weighted-average common shares outstanding. This estimated number of shares outstanding excludes the potential dilution from CarGurus utilizing its equity as the sole form of consideration to purchase the remaining 49% interest in CarOffer.

The assumptions that are built into guidance for the second quarter of 2023 regarding our pace of paid dealer acquisition, churn, and expansion activity for the relevant period are based on recent market behaviors and industry conditions. Guidance for the second quarter 2023 excludes macro-level industry issues that result in dealers and consumers materially changing their recent market behaviors or that cause us to enact measures to assist dealers. Guidance also excludes adjustments to the carrying value of redeemable noncontrolling interests resulting from potential changes in the redemption value of such interests, and any potential impact of foreign currency exchange gains or losses.

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

 


 

Conference Call and Webcast Information

CarGurus will host a conference call and live webcast to discuss its first quarter 2023 financial results and business outlook at 5:00 p.m. Eastern Time today, May 9, 2023. To access the conference call, dial (877) 451-6152 for callers in the U.S. or Canada, or (201) 389-0879 for international callers. The webcast will be available live on the Investors section of CarGurus’ website at https://investors.cargurus.com.

An audio replay of the call will also be available to investors beginning at approximately 8:00 p.m. Eastern Time today, May 9, 2023, until 11:59 p.m. Eastern Time on May 16, 2023, by dialing (844) 512-2921 for callers in the U.S. or Canada, or (412) 317-6671 for international callers, and entering passcode 13736915. In addition, an archived webcast will be available on the Investors section of CarGurus’ website at https://investors.cargurus.com.

About CarGurus

CarGurus (Nasdaq: CARG) is a multinational, online automotive platform for buying and selling vehicles that is building upon its industry-leading listings marketplace with both digital retail solutions and the CarOffer online wholesale platform. The CarGurus marketplace gives consumers the confidence to purchase or sell a vehicle either online or in-person, and it gives dealerships the power to accurately price, effectively market, instantly acquire and quickly sell vehicles, all with a nationwide reach. The company uses proprietary technology, search algorithms and data analytics to bring trust, transparency, and competitive pricing to the automotive shopping experience. CarGurus is the most visited automotive shopping site in the U.S. (source: SimilarWeb: Traffic Report, Q1 2023, U.S.).

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

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

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

© 2023 CarGurus, Inc., All Rights Reserved.

Cautionary Language Concerning Forward-Looking Statements

This press release includes forward-looking statements. Other than statements of historical facts, all statements contained in this press release, including, without limitation, statements regarding: our future financial and business performance for the second quarter 2023; our belief that the presentation of non-GAAP financial measures and other business metrics is helpful to our investors; our ability to quickly make transformations necessary for our business to achieve long-term goals; and the impact of macro-level issues on our industry, business and financial results, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “estimate,” “expect,” “guide,” “intend,” “likely,” “may,” “will” and similar expressions and their negatives are intended to identify forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks and uncertainties, including, without limitation, risks related to: our growth and our ability to grow our revenue; our relationships with dealers; competition in the markets in which we operate; market growth; our ability to innovate; our ability to realize benefits from our acquisitions and successfully implement the integration strategies in connection therewith; natural disasters, epidemics or pandemics; global supply chain challenges, increased inflation and interest rates, and other macroeconomic issues; the material weakness identified in our internal controls over financial reporting; changes in our key personnel; our ability to operate in compliance with applicable laws, as well as other risks and uncertainties as may be detailed from time to time in our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q and other reports we file with the Securities and Exchange Commission. Moreover, we operate in very competitive and rapidly changing environments. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, we cannot guarantee that future results, levels of activity, performance, achievements or events and circumstances reflected in the forward-looking statements will occur. We are under no duty to update any of these forward-looking statements after the date of this press release to conform these statements to actual results or revised expectations, except as required by law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this press release.

 

 

 


 

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

 

 

 

As of
March 31,
2023

 

 

As of
December 31,
2022

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

456,696

 

 

$

469,517

 

Accounts receivable, net of allowance for doubtful accounts of $1,054
   and $1,809, respectively

 

 

42,395

 

 

 

46,817

 

Inventory

 

 

1,637

 

 

 

5,282

 

Prepaid expenses, prepaid income taxes and other current assets

 

 

18,114

 

 

 

21,972

 

Deferred contract costs

 

 

9,387

 

 

 

8,541

 

Restricted cash

 

 

14,985

 

 

 

5,237

 

Total current assets

 

 

543,214

 

 

 

557,366

 

Property and equipment, net

 

 

42,748

 

 

 

40,128

 

Intangible assets, net

 

 

45,552

 

 

 

53,054

 

Goodwill

 

 

157,689

 

 

 

157,467

 

Operating lease right-of-use assets

 

 

196,413

 

 

 

56,869

 

Restricted cash

 

 

 

 

 

9,378

 

Deferred tax assets

 

 

47,385

 

 

 

35,488

 

Deferred contract costs, net of current portion

 

 

10,446

 

 

 

8,853

 

Other non-current assets

 

 

8,132

 

 

 

8,499

 

Total assets

 

$

1,051,579

 

 

$

927,102

 

Liabilities, redeemable noncontrolling interest and stockholders’ equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

42,701

 

 

$

32,529

 

Accrued expenses, accrued income taxes and other current liabilities

 

 

45,010

 

 

 

39,193

 

Deferred revenue

 

 

20,808

 

 

 

12,249

 

Operating lease liabilities

 

 

15,480

 

 

 

14,762

 

Total current liabilities

 

 

123,999

 

 

 

98,733

 

Operating lease liabilities

 

 

194,931

 

 

 

51,656

 

Deferred tax liabilities

 

 

30

 

 

 

54

 

Other non–current liabilities

 

 

4,336

 

 

 

5,301

 

Total liabilities

 

 

323,296

 

 

 

155,744

 

Redeemable noncontrolling interest

 

 

32,475

 

 

 

36,749

 

Stockholders’ equity:

 

 

 

 

 

 

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

 

 

 

 

 

 

Class A common stock, $0.001 par value per share; 500,000,000 shares
   authorized; 98,278,975 and 101,636,649 shares issued and outstanding
   at March 31, 2023 and December 31, 2022, respectively

 

 

98

 

 

 

102

 

Class B common stock, $0.001 par value per share; 100,000,000 shares
   authorized; 15,999,173 and 15,999,173 shares issued and outstanding
   at March 31, 2023 and December 31, 2022, respectively

 

 

16

 

 

 

16

 

Additional paid-in capital

 

 

357,748

 

 

 

413,092

 

Retained earnings

 

 

339,175

 

 

 

323,043

 

Accumulated other comprehensive loss

 

 

(1,229

)

 

 

(1,644

)

Total stockholders’ equity

 

 

695,808

 

 

 

734,609

 

Total liabilities, redeemable noncontrolling interest and stockholders’ equity

 

$

1,051,579

 

 

$

927,102

 

 

 


 

Unaudited Condensed Consolidated Income Statements

(in thousands, except share and per share data)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2023

 

 

2022

 

Revenue

 

 

 

 

 

 

Marketplace

 

$

167,127

 

 

$

163,289

 

Wholesale

 

 

25,186

 

 

 

90,994

 

Product

 

 

39,650

 

 

 

176,325

 

Total revenue

 

 

231,963

 

 

 

430,608

 

Cost of revenue (1)

 

 

 

 

 

 

Marketplace

 

 

15,533

 

 

 

12,209

 

Wholesale

 

 

22,068

 

 

 

58,182

 

Product

 

 

39,382

 

 

 

178,342

 

Total cost of revenue

 

 

76,983

 

 

 

248,733

 

Gross profit

 

 

154,980

 

 

 

181,875

 

Operating expenses:

 

 

 

 

 

 

Sales and marketing

 

 

75,577

 

 

 

87,581

 

Product, technology, and development

 

 

36,607

 

 

 

30,653

 

General and administrative

 

 

24,919

 

 

 

33,121

 

Depreciation and amortization

 

 

3,818

 

 

 

3,861

 

Total operating expenses

 

 

140,921

 

 

 

155,216

 

Income from operations

 

 

14,059

 

 

 

26,659

 

Other income (expense), net:

 

 

 

 

 

 

Interest income

 

 

3,743

 

 

 

37

 

Other income (expense), net

 

 

595

 

 

 

(156

)

Total other income (expense), net

 

 

4,338

 

 

 

(119

)

Income before income taxes

 

 

18,397

 

 

 

26,540

 

Provision for income taxes

 

 

6,531

 

 

 

7,702

 

Consolidated net income

 

 

11,866

 

 

 

18,838

 

Net loss attributable to redeemable noncontrolling interest

 

 

(4,266

)

 

 

(1,072

)

Net income attributable to CarGurus, Inc.

 

 

16,132

 

 

 

19,910

 

Accretion of redeemable noncontrolling interest to redemption value

 

 

 

 

 

82,000

 

Net income (loss) attributable to common stockholders

 

$

16,132

 

 

$

(62,090

)

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

 

 

 

 

 

 

Basic

 

$

0.14

 

 

$

(0.53

)

Diluted

 

$

0.10

 

 

$

(0.53

)

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

 

 

 

 

 

 

Basic

 

 

115,358,475

 

 

 

118,031,325

 

Diluted

 

 

115,915,737

 

 

 

118,031,325

 

(1)
Includes depreciation and amortization expense for the three months ended March 31, 2023 and 2022 of $7,758, and $7,324, respectively.

 

 


 

Unaudited Segment Revenue

(in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2023

 

 

2022

 

Segment Revenue:

 

 

 

 

 

 

U.S. Marketplace

 

$

155,621

 

 

$

151,889

 

Digital Wholesale

 

 

64,836

 

 

 

267,319

 

Other

 

 

11,506

 

 

 

11,400

 

Total

 

$

231,963

 

 

$

430,608

 

 

Unaudited Segment Income (loss) from Operations

(in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2023

 

 

2022

 

Segment Income (Loss) from Operations:

 

 

 

 

 

 

U.S. Marketplace

 

$

26,539

 

 

$

29,836

 

Digital Wholesale

 

 

(11,225

)

 

 

(2,111

)

Other

 

 

(1,255

)

 

 

(1,066

)

Total

 

$

14,059

 

 

$

26,659

 

 

 


 

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2023

 

 

2022

 

Operating Activities

 

 

 

 

 

 

Consolidated net income

 

$

11,866

 

 

$

18,838

 

Adjustments to reconcile consolidated net income to net cash provided
   by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

11,576

 

 

 

11,185

 

Gain on sale of property and equipment

 

 

(460

)

 

 

 

Currency (gain) loss on foreign denominated transactions

 

 

(198

)

 

 

84

 

Deferred taxes

 

 

(11,921

)

 

 

(13,091

)

Provision for doubtful accounts

 

 

(300

)

 

 

150

 

Stock-based compensation expense

 

 

14,904

 

 

 

14,147

 

Amortization of deferred financing costs

 

 

129

 

 

 

 

Amortization of deferred contract costs

 

 

2,737

 

 

 

2,806

 

Impairment of long-lived assets

 

 

175

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

6,858

 

 

 

39,973

 

Inventory

 

 

3,645

 

 

 

(1,336

)

Prepaid expenses, prepaid income taxes, and other assets

 

 

4,652

 

 

 

(2,127

)

Deferred contract costs

 

 

(5,138

)

 

 

(2,997

)

Accounts payable

 

 

10,268

 

 

 

(4,062

)

Accrued expenses, accrued income taxes, and other liabilities

 

 

4,542

 

 

 

30,087

 

Deferred revenue

 

 

8,557

 

 

 

(5

)

Lease obligations

 

 

4,453

 

 

 

(592

)

Net cash provided by operating activities

 

 

66,345

 

 

 

93,060

 

Investing Activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(2,398

)

 

 

(1,230

)

Capitalization of website development costs

 

 

(3,489

)

 

 

(2,506

)

Maturities of certificates of deposit

 

 

 

 

 

30,000

 

Net cash (used in) provided by investing activities

 

 

(5,887

)

 

 

26,264

 

Financing Activities

 

 

 

 

 

 

Proceeds from issuance of common stock upon exercise of stock options

 

 

19

 

 

 

680

 

Payment of finance lease obligations

 

 

(17

)

 

 

(19

)

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

 

 

(2,066

)

 

 

(5,430

)

Repurchase of common stock

 

 

(69,024

)

 

 

 

Payment of tax distributions to redeemable noncontrolling interest holders

 

 

(28

)

 

 

(8,519

)

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

 

 

(2,122

)

 

 

(23,606

)

Net cash used in financing activities

 

 

(73,238

)

 

 

(36,894

)

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

 

 

329

 

 

 

(212

)

Net (decrease) increase in cash, cash equivalents, and restricted cash

 

 

(12,451

)

 

 

82,218

 

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

 

 

484,132

 

 

 

248,280

 

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

 

$

471,681

 

 

$

330,498

 

 

 


 

Unaudited Reconciliation of GAAP Operating Income to Non-GAAP Operating Income and GAAP Operating Margin to Non-GAAP Operating Margin

(in thousands, except percentages)

 

 

Three Months Ended

 

 

March 31,

 

 

2023

 

 

2022

 

GAAP operating income

$

14,059

 

 

$

26,659

 

Stock-based compensation expense

 

14,977

 

 

 

27,842

 

Amortization of intangible assets

 

7,534

 

 

 

7,705

 

Non-GAAP operating income

$

36,570

 

 

$

62,206

 

 

 

 

 

 

 

GAAP operating margin

 

6

%

 

 

6

%

Non-GAAP operating margin

 

16

%

 

 

14

%

Unaudited Reconciliation of GAAP Consolidated Net Income to Non-GAAP Consolidated Net Income and Non-GAAP Net Income Attributable to Common Stockholders

(in thousands, except per share data)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2023

 

 

2022(1)

 

GAAP consolidated net income

 

$

11,866

 

 

$

18,838

 

Stock-based compensation expense

 

 

14,977

 

 

 

27,842

 

Amortization of intangible assets

 

 

7,534

 

 

 

7,705

 

Income tax effects and adjustments

 

 

(5,366

)

 

 

(7,864

)

Non-GAAP consolidated net income

 

 

29,011

 

 

 

46,521

 

Non-GAAP net (loss) income attributable to redeemable noncontrolling interest

 

 

(1,271

)

 

 

7,073

 

Non-GAAP net income attributable to common stockholders

 

$

30,282

 

 

$

39,448

 

Non-GAAP net income per share attributable to common stockholders:

 

 

 

 

 

 

Basic

 

$

0.26

 

 

$

0.33

 

Diluted

 

$

0.26

 

 

$

0.33

 

Shares used in Non-GAAP per share calculations

 

 

 

 

 

 

Basic

 

 

115,358

 

 

 

118,031

 

Diluted

 

 

115,916

 

 

 

118,031

 

(1)
In June 2022, we revised our calculation of non-GAAP net income attributable to common stockholders for income tax effects and adjustments. This revised calculation more accurately reflects management's view of our business and financial performance. Non-GAAP consolidated net income, non-GAAP net (loss) income attributable to redeemable noncontrolling interest, non-GAAP net income attributable to common stockholders, and non-GAAP net income per share attributable to common stockholders for the three months March 31, 2022 has been restated for comparison purposes.

Unaudited Reconciliation of GAAP Net Loss Attributable to Redeemable Noncontrolling Interest to Non-GAAP Net (Loss) Income Attributable to Redeemable Noncontrolling Interest
(in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2023

 

 

2022

 

GAAP net loss attributable to redeemable noncontrolling interest

 

$

(4,266

)

 

$

(1,072

)

Stock-based compensation expense(1)

 

 

221

 

 

 

5,371

 

Amortization of intangible assets(1)

 

 

2,774

 

 

 

2,774

 

Non-GAAP net (loss) income attributable to redeemable noncontrolling interest

 

$

(1,271

)

 

$

7,073

 

(1)
These exclusions are adjusted to reflect the noncontrolling shareholder's 38% share of earnings and losses in CarOffer.

 


 

Unaudited Reconciliation of GAAP Gross Profit to Non-GAAP Gross Profit and GAAP Gross Profit Margin to Non-GAAP Gross Profit Margin

(in thousands, except percentages)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2023

 

 

2022

 

Revenue

 

$

231,963

 

 

$

430,608

 

Cost of revenue

 

 

76,983

 

 

 

248,733

 

GAAP gross profit

 

 

154,980

 

 

 

181,875

 

Stock-based compensation expense included in Cost of revenue

 

 

143

 

 

 

136

 

Amortization of intangible assets included in Cost of revenue

 

 

5,266

 

 

 

5,350

 

Non-GAAP gross profit

 

$

160,389

 

 

$

187,361

 

 

 

 

 

 

 

 

GAAP gross profit margin

 

 

67

%

 

 

42

%

Non-GAAP gross profit margin

 

 

69

%

 

 

44

%

Unaudited Reconciliation of GAAP Expense to Non-GAAP Expense

(in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2023

 

 

2022

 

 

 

GAAP expense

 

 

Stock-based
compensation
expense

 

 

Amortization of
intangible assets

 

 

Non-GAAP
expense

 

 

GAAP expense

 

 

Stock-based
compensation
expense

 

 

Amortization of
intangible assets

 

 

Non-GAAP
expense

 

Cost of revenue

 

$

76,983

 

 

$

(143

)

 

$

(5,266

)

 

$

71,574

 

 

$

248,733

 

 

$

(136

)

 

$

(5,350

)

 

$

243,247

 

Sales and marketing

 

 

75,577

 

 

 

(3,084

)

 

 

 

 

 

72,493

 

 

 

87,581

 

 

 

(3,983

)

 

 

 

 

 

83,598

 

Product, technology, and development

 

 

36,607

 

 

 

(6,289

)

 

 

 

 

 

30,318

 

 

 

30,653

 

 

 

(6,368

)

 

 

 

 

 

24,285

 

General and administrative

 

 

24,919

 

 

 

(5,461

)

 

 

 

 

 

19,458

 

 

 

33,121

 

 

 

(17,355

)

 

 

 

 

 

15,766

 

Depreciation & amortization

 

 

3,818

 

 

 

 

 

 

(2,268

)

 

 

1,550

 

 

 

3,861

 

 

 

 

 

 

(2,355

)

 

 

1,506

 

Operating expenses(1)

 

$

140,921

 

 

$

(14,834

)

 

$

(2,268

)

 

$

123,819

 

 

$

155,216

 

 

$

(27,706

)

 

$

(2,355

)

 

$

125,155

 

Total cost of revenue and operating expenses

 

$

217,904

 

 

$

(14,977

)

 

$

(7,534

)

 

$

195,393

 

 

$

403,949

 

 

$

(27,842

)

 

$

(7,705

)

 

$

368,402

 

(1)
Operating expenses include sales and marketing, product, technology, and development, general and administrative, and depreciation & amortization.

 


 

Unaudited Reconciliation of GAAP Consolidated Net Income to Consolidated Adjusted EBITDA and Adjusted EBITDA

(in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2023

 

 

2022

 

GAAP consolidated net income

 

$

11,866

 

 

$

18,838

 

Depreciation and amortization

 

 

11,576

 

 

 

11,185

 

Impairment of long-lived assets

 

 

175

 

 

 

 

Stock-based compensation expense

 

 

14,977

 

 

 

27,842

 

Other (income) expense, net

 

 

(4,338

)

 

 

119

 

Provision for income taxes

 

 

6,531

 

 

 

7,702

 

Consolidated Adjusted EBITDA

 

 

40,787

 

 

 

65,686

 

Adjusted EBITDA attributable to redeemable noncontrolling interest

 

 

(677

)

 

 

7,736

 

Adjusted EBITDA

 

$

41,464

 

 

$

57,950

 

Unaudited Reconciliation of GAAP Net Loss Attributable to Redeemable Noncontrolling Interest to Adjusted EBITDA Attributable to Redeemable Noncontrolling Interest
(in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2023

 

 

2022

 

GAAP net loss attributable to redeemable noncontrolling interest

 

$

(4,266

)

 

$

(1,072

)

Depreciation and amortization (1)

 

 

2,948

 

 

 

2,910

 

Impairment of long-lived assets (1)

 

 

67

 

 

 

 

Stock-based compensation expense (1)

 

 

221

 

 

 

5,371

 

Other expense, net (1)

 

 

348

 

 

 

436

 

Provision for income taxes (1)

 

 

5

 

 

 

91

 

Adjusted EBITDA attributable to redeemable noncontrolling interest

 

$

(677

)

 

$

7,736

 

(1)
These exclusions are adjusted to reflect the noncontrolling interest of 38%.

Unaudited Reconciliation of GAAP Net Cash and Cash Equivalents Provided by Operating Activities to Non-GAAP Free Cash Flow

(in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2023

 

 

2022

 

GAAP net cash and cash equivalents provided by operating activities

 

$

66,345

 

 

$

93,060

 

Purchases of property and equipment

 

 

(2,398

)

 

 

(1,230

)

Capitalization of website development costs

 

 

(3,489

)

 

 

(2,506<