8-K
false000149425900014942592024-02-262024-02-26

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

CURRENT REPORT

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

Date of Report (Date of earliest event reported): February 26, 2024

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.)

 

55 Cambridge Parkway, 6th Floor

Cambridge, Massachusetts 02142

(Address of Principal Executive Offices)

(Zip Code)

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

Not Applicable

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

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

 

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

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

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

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

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

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Class A Common Stock,
par value $0.001 per share

 

CARG

 

The Nasdaq Stock Market LLC
(Nasdaq Global Select Market)

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

Emerging growth company

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

 

 

 


 

Item 2.02 Results of Operations and Financial Condition.

On February 26, 2024, CarGurus, Inc. (the "Company") announced its financial results for the quarter and year ended December 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 press release attached as Exhibit 99.1 hereto is being furnished pursuant to Item 2.02 of this Current Report on Form 8-K 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 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On January 12, 2024, the Company announced that, effective as of April 5, 2024 (the “Separation Date”), Andrea Eldridge will step down as the Chief People Officer. In connection with Ms. Eldridge’s departure, on February 26, 2024, the Company and Ms. Eldridge entered into a separation agreement, pursuant to which, in exchange for granting and not revoking a customary release and in recognition of Ms. Eldridge’s contributions to the Company, Ms. Eldridge will receive the following payments consisting of (a) a lump sum cash payment in the amount of $258,750, which is equal to nine months of Ms. Eldridge’s current base salary (the “Severance Pay”); (b) continuation of certain subsidized medical and dental benefits until January 31, 2025; and (c) the acceleration of vesting of (x) 34,364 restricted stock units and (y) 6,161 shares subject to nonqualified stock options granted to Ms. Eldridge during her employment that would have vested during the nine month period following the Separation Date had Ms. Eldridge’s employment continued during that time (the “Acceleration of Vesting”). The Acceleration of Vesting will occur on the effective date of the Supplemental Release of Claims that Ms. Eldridge will sign in connection with her departure, and the Severance Pay will be paid on the first practicable payroll date thereafter. The Severance Pay is inclusive of any severance payments contemplated in the Offer Letter, dated January 17, 2020, by and between the Company and Ms. Eldridge.

 

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit

No.

Description

99.1

Press Release of CarGurus, Inc., dated February 26, 2024.

104

 

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

 

 

 


 

SIGNATURES

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

 

CARGURUS, INC.

Date: February 26, 2024

By:

/s/ Jason Trevisan

Name: Jason Trevisan

Title: Chief Executive Officer

 

 


EX-99.1

Exhibit 99.1

https://cdn.kscope.io/81156190ae6cf73d4fe86c518d3f5e9e-img239243378_0.jpg 

 

CarGurus Announces Fourth Quarter and Full-Year 2023 Results

4Q’23 Marketplace Revenue further accelerated to 10% YoY, fastest pace in 10 quarters

4Q'23 Consolidated Net Loss of $(22.6) million, down 197% YoY; 4Q'23 Non-GAAP Consolidated Adjusted EBITDA of $61.2 million, up 120% YoY

Repurchased $99.9 million worth of shares in 4Q’23 and a total of $204.1 million worth of shares in FY 2023

CAMBRIDGE, Mass., February 26, 2024 — CarGurus, Inc. (Nasdaq: CARG), the No. 1 visited digital auto platform for shopping, buying, and selling new and used vehicles1, today announced financial results for the fourth quarter and year ended December 31, 2023.

"We are extremely pleased with our performance, as our Marketplace business continued to accelerate in the fourth quarter, achieving the fastest pace of growth in nearly three years," said Jason Trevisan, Chief Executive Officer at CarGurus. "In December, we completed the acquisition of CarOffer, which further expanded our addressable market in the highly synergistic and underpenetrated digital wholesale sector. Throughout 2023 we added to our product suite and enriched our value proposition to meet the changing needs of dealers and consumers. Looking ahead to 2024, we will continue to invest in growth initiatives while maintaining financial discipline and prioritizing operational excellence and efficient capital allocation. We are excited by the opportunities in front of us, and we look forward to accelerating our momentum."

 

Fourth Quarter and Full Year Financial Highlights

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31, 2023

 

 

December 31, 2023

 

 

 

Results
(in millions)

 

 

Variance from Prior Year

 

 

Results
(in millions)

 

 

Variance from Prior Year

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Marketplace Revenue

 

$

182.3

 

 

 

10

%

 

$

698.2

 

 

 

6

%

Wholesale Revenue

 

 

22.0

 

 

 

(7

)%

 

 

100.9

 

 

 

(58

)%

Product Revenue

 

 

18.8

 

 

 

(81

)%

 

 

115.1

 

 

 

(85

)%

Total Revenue

 

$

223.1

 

 

 

(22

)%

 

$

914.2

 

 

 

(45

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

$

168.0

 

 

 

23

%

 

$

651.5

 

 

 

(1

)%

% Margin

 

 

75

%

 

2,752 bps

 

 

 

71

%

 

3,153 bps

 

Operating Expenses (1)

 

$

190.3

 

 

 

77

%

 

$

618.8

 

 

 

13

%

GAAP Consolidated Net (Loss) Income

 

$

(22.6

)

 

 

(197

)%

 

$

22.1

 

 

 

(72

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Consolidated Adjusted EBITDA (2)

 

$

61.2

 

 

 

120

%

 

$

195.8

 

 

 

4

%

% Margin

 

 

27

%

 

1,770 bps

 

 

 

21

%

 

1,008 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash, Cash Equivalents, and Short-Term Investments at period end

 

$

312.1

 

 

 

(34

)%

 

$

312.1

 

 

 

(34

)%

 

(1)
Inclusive of $48.2 million and $1.0M of stock-based compensation expense for CO Incentive Units, Subject Units (each as defined in the Company's Annual Report on Form 10-K as of December 31, 2023, filed on February 26, 2024), and payments made to noncontrolling interest holders, or collectively CarOffer, LLC Units, and transaction-related costs, respectively.
(2)
For more information regarding our use of Consolidated Adjusted EBITDA and other non-GAAP financial measures, 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.

1


 

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31, 2023

 

 

December 31, 2023

 

 

 

Results

 

 

Variance from Prior Year

 

 

Results

 

 

Variance from Prior Year

 

Key Performance Indicators (1)

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Paying Dealers (2)

 

 

24,318

 

 

 

(1

)%

 

 

24,318

 

 

 

(1

)%

International Paying Dealers (2)

 

 

6,617

 

 

 

(2

)%

 

 

6,617

 

 

 

(2

)%

Total Paying Dealers (2)

 

 

30,935

 

 

 

(1

)%

 

 

30,935

 

 

 

(1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. QARSD (2)

 

$

6,532

 

 

 

12

%

 

$

6,532

 

 

 

12

%

International QARSD (2)

 

$

1,773

 

 

 

16

%

 

$

1,773

 

 

 

16

%

Consolidated QARSD (2)

 

$

5,503

 

 

 

12

%

 

$

5,503

 

 

 

12

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Transactions

 

 

13,558

 

 

 

(26

)%

 

 

65,418

 

 

 

(66

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Average Monthly Unique Users (in millions) (3)

 

 

29.3

 

 

 

11

%

 

 

31.2

 

 

 

7

%

U.S. Average Monthly Sessions (in millions) (3)

 

 

76.8

 

 

 

10

%

 

 

82.3

 

 

 

6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

International Average Monthly Unique Users (in millions) (3)

 

 

7.0

 

 

 

10

%

 

 

7.1

 

 

 

7

%

International Average Monthly Sessions (in millions) (3)

 

 

16.2

 

 

 

8

%

 

 

16.5

 

 

 

8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Reporting (4)

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Marketplace Segment Revenue (in millions)

 

$

168.9

 

 

 

9

%

 

$

647.3

 

 

 

5

%

U.S. Marketplace Segment Operating Income (in millions)

 

$

43.3

 

 

 

22

%

 

$

127.7

 

 

 

(1

)%

Digital Wholesale Segment Revenue (in millions)

 

$

40.9

 

 

 

(66

)%

 

$

216.0

 

 

 

(78

)%

Digital Wholesale Segment Operating Loss (in millions) (5)

 

$

(67.2

)

 

NM

 

 

$

(96.4

)

 

NM

 

 

(1)
For more information regarding our use of Key Performance Indicators, please see the section titled “Non-GAAP Financial Measures and Other Business Metrics” below.
(2)
Metrics presented as of December 31, 2023.
(3)
CarOffer website is excluded from the metrics presented for users and sessions.
(4)
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. For more information regarding our segment reporting, please see the financial tables at the end of this press release.
(5)
NM - not meaningful as Digital Wholesale Segment Operating Loss is inclusive of certain one-time expenses in connection with the acquisition of the remaining minority equity interests in CarOffer, LLC.

2


 

First Quarter 2024 Guidance

The table below provides CarGurus’ guidance, which is based on recent market trends, industry conditions, and management’s expectations and assumptions as of today.

 

Guidance Metrics

Range

Total revenue

$201 million to $221 million

Marketplace revenue

$182 million to $187 million

Non-GAAP Consolidated Adjusted EBITDA

$41 million to $49 million

Non-GAAP EPS

$0.24 to $0.29

The first quarter 2024 non-GAAP EPS calculation assumes 108.8 million diluted weighted-average common shares outstanding.

The assumptions that are built into guidance for the first quarter 2024 regarding our pace of paid dealer acquisition, churn, and expansion activity for the relevant period are based on recent market trends and industry conditions. Guidance for the first quarter 2024 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 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 reconciling items between such GAAP and non-GAAP financial measures, which include, as applicable, stock-based compensation, stock-based compensation for CarOffer, LLC Units, amortization of intangible assets, impairment of long-lived assets, depreciation expenses, non-intangible amortization, transaction-related expenses, other income, net, the provision for income taxes, and income tax effects, 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 transaction-related expenses, and therefore cannot be determined without unreasonable effort.

 

3


 

Conference Call and Webcast Information

CarGurus will host a conference call and live webcast to discuss its fourth quarter and full year 2023 financial results and business outlook at 5:00 p.m. Eastern Time today, February 26, 2024. To access the conference call, dial (877) 451-6152 for callers in the U.S. or Canada, or (201) 389-0879 for international callers. The webcast will be available live on the Investors section of CarGurus’ website at https://investors.cargurus.com.

An audio replay of the call will also be available to investors beginning at approximately 8:00 p.m. Eastern Time today, February 26, 2024, until 11:59 p.m. Eastern Time on March 11, 2024, by dialing (844) 512-2921 for callers in the U.S. or Canada, or (412) 317-6671 for international callers, and entering passcode 13743012. 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 platform gives consumers the confidence to purchase and/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.1

1Source: SimilarWeb: Traffic Report, Q4 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.

© 2024 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 statements regarding our future financial and business performance for the first quarter 2024; our expectation that we will continue to invest in growth initiatives; 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 “aim,” “anticipate,” “believe,” “could,” “estimate,” “expect,” “goal,” “guide,” “guidance,” “intend,” “may,” “might,” “plan,” “potential,” “predicts,” “projects,” “seeks,” “should,” “target,” “will,” “would,” 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. You should not rely upon forward-looking statements as predictions of future events.

These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those reflected in such statements, including 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; increased inflation and interest rates, global supply chain challenges, and other macroeconomic issues; the material weakness identified in our internal controls over financial reporting; changes in our key personnel; natural disasters, epidemics, or pandemics; and 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 U.S. 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

4


 

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.


Investor Contact:

Kirndeep Singh

Vice President, Investor Relations

investors@cargurus.com

 

 

5


 

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

 

 

 

As of December 31,

 

 

 

2023

 

 

2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

291,363

 

 

$

469,517

 

Short-term investments

 

 

20,724

 

 

 

 

Accounts receivable, net of allowance for doubtful accounts of $610 and
   $1,809, respectively

 

 

39,963

 

 

 

46,817

 

Inventory

 

 

331

 

 

 

5,282

 

Prepaid expenses, prepaid income taxes and other current assets

 

 

25,152

 

 

 

21,972

 

Deferred contract costs

 

 

11,095

 

 

 

8,541

 

Restricted cash

 

 

2,563

 

 

 

5,237

 

Total current assets

 

 

391,191

 

 

 

557,366

 

Property and equipment, net

 

 

83,370

 

 

 

40,128

 

Intangible assets, net

 

 

23,056

 

 

 

53,054

 

Goodwill

 

 

157,898

 

 

 

157,467

 

Operating lease right-of-use assets

 

 

169,682

 

 

 

56,869

 

Restricted cash

 

 

 

 

 

9,378

 

Deferred tax assets

 

 

73,356

 

 

 

35,488

 

Deferred contract costs, net of current portion

 

 

12,998

 

 

 

8,853

 

Other non-current assets

 

 

7,376

 

 

 

8,499

 

Total assets

 

$

918,927

 

 

$

927,102

 

Liabilities, redeemable noncontrolling interest and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

47,854

 

 

$

32,529

 

Accrued expenses, accrued income taxes and other current liabilities

 

 

33,718

 

 

 

39,193

 

Deferred revenue

 

 

21,322

 

 

 

12,249

 

Operating lease liabilities

 

 

12,284

 

 

 

14,762

 

Total current liabilities

 

 

115,178

 

 

 

98,733

 

Operating lease liabilities

 

 

182,106

 

 

 

51,656

 

Deferred tax liabilities

 

 

58

 

 

 

54

 

Other non–current liabilities

 

 

4,733

 

 

 

5,301

 

Total liabilities

 

 

302,075

 

 

 

155,744

 

Redeemable noncontrolling interest

 

 

 

 

 

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; 92,175,243 and 101,636,649 shares issued and outstanding at
   December 31, 2023 and 2022, respectively

 

 

92

 

 

 

102

 

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

 

 

16

 

 

 

16

 

Additional paid–in capital

 

 

263,498

 

 

 

413,092

 

Retained earnings

 

 

354,147

 

 

 

323,043

 

Accumulated other comprehensive loss

 

 

(901

)

 

 

(1,644

)

Total stockholders’ equity

 

 

616,852

 

 

 

734,609

 

Total liabilities, redeemable noncontrolling interest and stockholders’ equity

 

$

918,927

 

 

$

927,102

 

 

6


 

Unaudited Condensed Consolidated Income Statements

(in thousands, except share and per share data)

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Marketplace

 

$

182,250

 

 

$

166,247

 

 

$

698,236

 

 

$

658,771

 

Wholesale

 

 

22,035

 

 

 

23,659

 

 

 

100,908

 

 

 

237,635

 

Product

 

 

18,838

 

 

 

96,838

 

 

 

115,098

 

 

 

758,629

 

Total revenue

 

 

223,123

 

 

 

286,744

 

 

 

914,242

 

 

 

1,655,035

 

Cost of revenue(1)

 

 

 

 

 

 

 

 

 

 

 

 

Marketplace

 

 

14,190

 

 

 

15,618

 

 

 

60,020

 

 

 

56,040

 

Wholesale

 

 

22,286

 

 

 

29,957

 

 

 

90,066

 

 

 

176,446

 

Product

 

 

18,612

 

 

 

104,127

 

 

 

112,702

 

 

 

764,996

 

Total cost of revenue

 

 

55,088

 

 

 

149,702

 

 

 

262,788

 

 

 

997,482

 

Gross profit

 

 

168,035

 

 

 

137,042

 

 

 

651,454

 

 

 

657,553

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

73,827

 

 

 

70,203

 

 

 

304,070

 

 

 

336,708

 

Product, technology, and development

 

 

36,737

 

 

 

31,553

 

 

 

146,169

 

 

 

123,768

 

General and administrative

 

 

75,667

 

 

 

1,722

 

 

 

152,757

 

 

 

73,117

 

Depreciation and amortization

 

 

4,069

 

 

 

3,943

 

 

 

15,831

 

 

 

15,482

 

Total operating expenses

 

 

190,300

 

 

 

107,421

 

 

 

618,827

 

 

 

549,075

 

Income from operations

 

 

(22,265

)

 

 

29,621

 

 

 

32,627

 

 

 

108,478

 

Other income, net:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

5,093

 

 

 

2,339

 

 

 

18,430

 

 

 

3,845

 

Other income (expense), net

 

 

782

 

 

 

620

 

 

 

630

 

 

 

(961

)

Total other income, net

 

 

5,875

 

 

 

2,959

 

 

 

19,060

 

 

 

2,884

 

Income before income taxes

 

 

(16,390

)

 

 

32,580

 

 

 

51,687

 

 

 

111,362

 

Provision for income taxes

 

 

6,213

 

 

 

9,349

 

 

 

29,634

 

 

 

32,408

 

Consolidated net income

 

 

(22,603

)

 

 

23,231

 

 

 

22,053

 

 

 

78,954

 

Net loss attributable to redeemable noncontrolling interest

 

 

(4,698

)

 

 

(1,562

)

 

 

(14,889

)

 

 

(5,433

)

Net (loss) income attributable to CarGurus, Inc.

 

$

(17,905

)

 

$

24,793

 

 

$

36,942

 

 

$

84,387

 

Deemed dividend on redemption of noncontrolling interest

 

 

5,838

 

 

 

 

 

 

5,838

 

 

 

 

Accretion of redeemable noncontrolling interest to redemption value

 

 

 

 

 

(134,454

)

 

 

 

 

 

(109,398

)

Net (loss) income attributable to common stockholders

 

$

(23,743

)

 

$

159,247

 

 

$

31,104

 

 

$

193,785

 

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

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.21

)

 

$

1.34

 

 

$

0.27

 

 

$

1.64

 

Diluted

 

$

(0.21

)

 

$

0.20

 

 

$

0.19

 

 

$

0.62

 

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

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

110,988,515

 

 

 

118,783,793

 

 

 

113,240,139

 

 

 

118,474,991

 

Diluted

 

 

110,988,515

 

 

 

119,117,004

 

 

 

114,188,834

 

 

 

128,150,974

 

(1)
Includes depreciation and amortization expense for the three months ended December 31, 2023 and 2022 and for the twelve months ended December 31, 2023 and 2022 of $8,692, $7,789, $32,643, and $29,852, respectively.

 

 

7


 

Unaudited Segment Revenue

(in thousands)

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Segment Revenue: (1)

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Marketplace

 

$

168,897

 

 

$

155,092

 

 

$

647,284

 

 

$

614,136

 

Digital Wholesale

 

 

40,872

 

 

 

120,497

 

 

 

216,005

 

 

 

996,264

 

Other

 

 

13,354

 

 

 

11,155

 

 

 

50,953

 

 

 

44,635

 

Total

 

$

223,123

 

 

$

286,744

 

 

$

914,242

 

 

$

1,655,035

 

 

Unaudited Segment (Loss) Income from Operations

(in thousands)

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Segment Income (Loss) from Operations: (1)(2)

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Marketplace

 

$

43,281

 

 

$

35,613

 

 

$

127,724

 

 

$

128,455

 

Digital Wholesale

 

 

(67,199

)

 

 

(3,486

)

 

 

(96,383

)

 

 

(11,834

)

Other

 

 

1,653

 

 

 

(2,506

)

 

 

1,286

 

 

 

(8,143

)

Total

 

$

(22,265

)

 

$

29,621

 

 

$

32,627

 

 

$

108,478

 

 

(1)
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 U.S. Marketplace segment derives revenue from marketplace services from customers within the U.S. The Digital Wholesale segment derives revenue from Dealer-to-Dealer and Instant Max Cash Offer ("IMCO") services and products which are sold on the CarOffer platform. The Company also has two operating segments which are individually immaterial and therefore aggregated into the Other category to reconcile reportable segments to the consolidated income statements. The Other category derives revenues from marketplace services from customers outside of the U.S.
(2)
For the year ended December 31, 2022, Digital Wholesale segment 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 and the year ended December 31, 2022, respectively, for comparative purposes.

8


 

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Operating Activities

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated net income

 

$

(22,603

)

 

$

23,231

 

 

$

22,053

 

 

$

78,954

 

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

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

12,761

 

 

 

11,732

 

 

 

48,474

 

 

 

45,334

 

Gain on sale of property and equipment

 

 

 

 

 

 

 

 

(460

)

 

 

 

Currency (gain) loss on foreign denominated transactions

 

 

(532

)

 

 

(462

)

 

 

(283

)

 

 

155

 

Other non-cash expense, net

 

 

(80

)

 

 

 

 

 

88

 

 

 

 

Deferred taxes

 

 

(5,735

)

 

 

8,551

 

 

 

(37,864

)

 

 

(22,114

)

Provision for doubtful accounts

 

 

131

 

 

 

640

 

 

 

378

 

 

 

1,769

 

Stock-based compensation expense

 

 

19,968

 

 

 

13,227

 

 

 

63,737

 

 

 

54,777

 

Amortization of deferred financing costs

 

 

128

 

 

 

129

 

 

 

515

 

 

 

136

 

Amortization of deferred contract costs

 

 

3,188

 

 

 

2,735

 

 

 

11,817

 

 

 

11,067

 

Impairment of long-lived assets

 

 

 

 

 

165

 

 

 

184

 

 

 

165

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

10,638

 

 

 

89,470

 

 

 

10,975

 

 

 

152,954

 

Inventory

 

 

(3,001

)

 

 

22,884

 

 

 

1,958

 

 

 

14,374

 

Prepaid expenses, prepaid income taxes, and other assets

 

 

(7,525

)

 

 

8,102

 

 

 

(1,498

)

 

 

(6,573

)

Deferred contract costs

 

 

(4,752

)

 

 

(4,608

)

 

 

(18,440

)

 

 

(13,697

)

Accounts payable

 

 

903

 

 

 

(36,357

)

 

 

2,080

 

 

 

(35,047

)

Accrued expenses, accrued income taxes, and other liabilities

 

 

(4,435

)

 

 

(44,001

)

 

 

(3,419

)

 

 

(25,077

)

Deferred revenue

 

 

270

 

 

 

(505

)

 

 

9,067

 

 

 

(525

)

Lease obligations

 

 

3,172

 

 

 

370

 

 

 

15,165

 

 

 

(546

)

Net cash provided by operating activities

 

 

2,496

 

 

 

95,303

 

 

 

124,527

 

 

 

256,106

 

Investing Activities

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(15,515

)

 

 

(1,756

)

 

 

(24,563

)

 

 

(5,924

)

Proceeds from sale of property and equipment

 

 

 

 

 

 

 

 

460

 

 

 

 

Capitalization of website development costs

 

 

(4,875

)

 

 

(3,071

)

 

 

(16,648

)

 

 

(11,346

)

Purchases of short-term investments

 

 

(1,268

)

 

 

 

 

 

(98,016

)

 

 

 

Maturities of short-term investments

 

 

 

 

 

 

 

 

 

 

 

90,000

 

Sale of short-term investments

 

 

72,462

 

 

 

 

 

 

77,462

 

 

 

 

Advance payments to customers, net of collections

 

 

2,649

 

 

 

 

 

 

(259

)

 

 

 

Net cash provided by (used in) investing activities

 

 

53,453

 

 

 

(4,827

)

 

 

(61,564

)

 

 

72,730

 

Financing Activities

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock upon exercise of stock options

 

 

 

 

 

2

 

 

 

74

 

 

 

721

 

Payment of finance lease obligations

 

 

(18

)

 

 

(17

)

 

 

(70

)

 

 

(68

)

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

 

 

(3,859

)

 

 

(1,851

)

 

 

(15,597

)

 

 

(16,022

)

Repurchase of common stock

 

 

(101,115

)

 

 

(14,428

)

 

 

(208,524

)

 

 

(14,428

)

Payment of deferred financing costs

 

 

 

 

 

 

 

 

 

 

 

(2,578

)

Payment of tax distributions to redeemable noncontrolling interest holders

 

 

 

 

 

(70

)

 

 

(38

)

 

 

(19,913

)

Acquisition of remaining interest in CarOffer, LLC

 

 

(25,014

)

 

 

 

 

 

(25,014

)

 

 

 

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

 

 

48

 

 

 

(18,567

)

 

 

(4,475

)

 

 

(40,332

)

Net cash used in financing activities

 

 

(129,958

)

 

 

(34,931

)

 

 

(253,644

)

 

 

(92,620

)

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

 

 

981

 

 

 

1,276

 

 

 

475

 

 

 

(364

)

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

 

 

(73,028

)

 

 

56,821

 

 

 

(190,206

)

 

 

235,852

 

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

 

 

366,954

 

 

 

427,311

 

 

 

484,132

 

 

 

248,280

 

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

 

$

293,926

 

 

$

484,132

 

 

$

293,926

 

 

$

484,132

 

 

9


 

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

 

 

Year Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2023

 

 

2022(1)

 

 

2023

 

 

2022(1)

 

GAAP consolidated net income

 

$

(22,603

)

 

$

23,231

 

 

$

22,053

 

 

$

78,954

 

Stock-based compensation expense

 

 

14,071

 

 

 

13,227

 

 

 

57,913

 

 

 

54,777

 

Stock-based compensation expense for CarOffer, LLC Units

 

 

55,543

 

 

 

(26,898

)

 

 

55,543

 

 

 

(21,095

)

Amortization of intangible assets

 

 

7,513

 

 

 

7,670

 

 

 

30,062

 

 

 

30,716

 

Transaction-related expenses

 

 

1,044

 

 

 

 

 

 

1,044

 

 

 

 

Income tax effects and adjustments

 

 

(16,765

)

 

 

200

 

 

 

(27,452

)

 

 

(13,954

)

Non-GAAP consolidated net income

 

$

38,803

 

 

$

17,430

 

 

$

139,163

 

 

$

129,398

 

Non-GAAP net loss attributable to redeemable noncontrolling interest

 

 

(456

)

 

 

(8,831

)

 

 

(1,686

)

 

 

(1,649

)

Non-GAAP net income attributable to common stockholders

 

$

39,259

 

 

$

26,261

 

 

$

140,849

 

 

$

131,047

 

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

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.35

 

 

$

0.22

 

 

$

1.24

 

 

$

1.11

 

Diluted

 

$

0.35

 

 

$

0.22

 

 

$

1.23

 

 

$

1.02

 

Shares used in Non-GAAP per share calculations

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

110,989

 

 

 

118,784

 

 

 

113,240

 

 

 

118,475

 

Diluted

 

 

110,989

 

 

 

119,117

 

 

 

114,189

 

 

 

128,151

 

(1)
We have updated the table above to separately disclose the stock-based compensation expense for CarOffer, LLC Units and, as such, have updated the three months and year ended December 31, 2022 for comparative purposes.

 

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

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2023

 

 

2022(1)

 

 

2023

 

 

2022(1)

 

GAAP net loss attributable to redeemable noncontrolling interest

 

$

(4,698

)

 

$

(1,562

)

 

$

(14,889

)

 

$

(5,433

)

Stock-based compensation expense(2)

 

 

144

 

 

 

213

 

 

 

783

 

 

 

731

 

Stock-based compensation expense for CarOffer, LLC Units (2)

 

 

2,249

 

 

 

(10,256

)

 

 

2,249

 

 

 

(8,043

)

Amortization of intangible assets(2)

 

 

1,849

 

 

 

2,774

 

 

 

10,171

 

 

 

11,096

 

Non-GAAP net loss attributable to redeemable noncontrolling interest

 

$

(456

)

 

$

(8,831

)

 

$

(1,686

)

 

$

(1,649

)

(1)
We have updated the table above to separately disclose the stock-based compensation expense for CarOffer, LLC Units and, as such, have updated the three months and year ended December 31, 2022 for comparative purposes.
(2)
These exclusions are adjusted to reflect the noncontrolling interest of 38% for the period prior to our acquisition of the remaining minority equity interests in CarOffer, LLC (the "2023 CarOffer Transaction").

 

10


 

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

(in thousands)

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2023

 

 

2022(1)

 

 

2023

 

 

2022(1)

 

GAAP consolidated net income

 

$

(22,603

)

 

$

23,231

 

 

$

22,053

 

 

$

78,954

 

Depreciation and amortization

 

 

12,761

 

 

 

11,732

 

 

 

48,474

 

 

 

45,334

 

Impairment of long-lived assets

 

 

 

 

 

165

 

 

 

184

 

 

 

165

 

Stock-based compensation expense

 

 

14,071

 

 

 

13,227

 

 

 

57,913

 

 

 

54,777

 

Stock-based compensation expense for CarOffer, LLC Units

 

 

55,543

 

 

 

(26,898

)

 

 

55,543