Why CarGurus Shares Are Declining Today

CarGurus, Inc. CARG shares are trading lower after it reported fourth-quarter FY23 financial results.

On Monday, the company reported that total revenues declined 22% Y/Y to $223.1 million, beating the consensus of $220.05 million.

U.S. Marketplace Segment revenue rose 9% Y/Y to $168.9 million, while Digital Wholesale Segment revenue fell 66% Y/Y to $40.9 million.

Total Paying Dealers fell 1% Y/Y to 30,935, and transactions declined 26% Y/Y to 13,558 in the quarter.

Adjusted gross profit rose to $175.1 million from $142.5 million a year ago, with a margin of 78% (vs. 50% the prior year). 

Adjusted EBITDA jumped 120% Y/Y to $61.2 million, with margins expanding 1,770 basis points Y/Y to 27%.

Adjusted EPS of $0.35 topped the consensus of $0.34.

The company repurchased $99.9 million worth of shares in the fourth-quarter FY23. As of December 31, cash and cash equivalents stood at $312.1 million.

Outlook: CarGurus sees first-quarter FY24 adjusted EPS of $0.24-$0.29 (vs. consensus of $0.31) and revenue of $201 million-$221 million (vs. $235.7 million estimate).

Jason Trevisan, Chief Executive Officer, said, “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.”

Price Action: CARG shares are down 7.2% at $22.17 on the last check Tuesday.