CarGurus Q2 2025 Earnings: Growth Amid Challenges

Cargurus ((CARG)) has held its Q2 earnings call. Read on for the main highlights of the call.

CarGurus’ recent earnings call painted a picture of both robust growth and strategic challenges. The company showcased strong financial growth and innovation, particularly in its core Marketplace and international businesses. However, it also faced significant hurdles with the wind-down of its CarOffer transactions business and declines in wholesale and product revenues.

Strong Financial Performance

CarGurus delivered an impressive financial performance in Q2 2025, achieving double-digit year-over-year revenue growth and expanding profitability in its U.S. and International Marketplace businesses. Marketplace revenue increased by 14% year-over-year, adding $27 million, while Marketplace adjusted EBITDA saw a remarkable 31% growth year-over-year.

International Growth

The international segment of CarGurus reported outstanding growth, with a 28% increase in revenue year-over-year. The company successfully added 711 net new dealers across Canada and the U.K., and lead volume growth was substantial in both markets, underscoring the strength of its international expansion strategy.

Innovative Product Launches

CarGurus introduced several innovative products, including New Car Advantage and VIN level targeting, which have shown strong early adoption and engagement. Additionally, the Digital Deal adoption has grown to approximately 12,000 dealers globally, reflecting the company’s commitment to innovation.

Strong Engagement Metrics

The CarGurus app experienced a 71% increase in daily active users year-over-year. Overall consumer engagement remained robust, with CarGurus holding its position as the #1 most visited listing site in the U.S., and users spending 74% more total minutes on the site than its closest competitor.

Challenges with CarOffer

Despite advancements in predictive analytics and AI-driven insights, CarGurus decided to wind down the CarOffer transactions business due to rising market volatility and structural limitations. This strategic decision reflects the company’s adaptability in navigating market challenges.

Decline in Wholesale and Product Revenues

CarGurus faced a significant decline in wholesale and product revenues, with wholesale revenue down 52% year-over-year and product revenue down 45% year-over-year. This was driven by a 55% decrease in transaction volume, highlighting the challenges in these segments.

Impairment Charges

The company recorded $32.6 million in total impairment charges associated with the CarOffer business in Q2 2025, reflecting the financial impact of winding down this segment.

Forward-Looking Guidance

Looking ahead, CarGurus remains optimistic about its financial health and strategic direction. The company highlighted a 14% year-over-year increase in Marketplace revenue, driven by the addition of 1,743 net new dealers globally and increased wallet share from existing customers. Despite the challenges with CarOffer, CarGurus is focusing on leveraging AI-driven insights and predictive analytics to enhance dealer operations. The company also announced a $150 million increase to their share repurchase program, affirming confidence in its financial stability.

In summary, CarGurus’ earnings call reflected a dynamic mix of strong growth and strategic challenges. While the company demonstrated impressive financial performance and innovation, it also faced significant hurdles with the CarOffer business and declines in certain revenue streams. Looking forward, CarGurus is committed to leveraging technology and strategic initiatives to drive future growth and shareholder value.