CARG - Earnings call 4 2023

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Operator

Greetings, and welcome to CarGurus Fourth Quarter and Full Year 2023 Earnings Results Conference. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host, Kirndeep Singh, Head of Investor Relations. Thank you, Kirndeep.

You may begin.

Kirndeep Singh

operator. you, Thank Good afternoon. to Call. XXXX you Fourth and welcome Quarter CarGurus' Year to Earnings Full delighted I'm on call Operating me Sam Palazzo, With the Financial Zales, Executive Trevisan, Chief President Officer; Chief and Chief Officer. Officer; Elisa today and are Jason

our turn useful I'll in past for that, future by over overall prospects to their our non-GAAP GAAP provide which can non-GAAP Information differ certain greater forward-looking the discussed in which found we relates obligation our non-GAAP those well in We based decision-making. With of actual we results, and could financial today, call of presentation, concerning website. and our operational investor These now financial and transparency Investor can by cause revise on comparable our today to updated making issued understanding press course expectations such to our measures information management refer about SEC subject to which statements financial as these measures. filings, are to our During will the included are during enhance uncertainties except be of believe our materially used update section risks to in on as and in statements, reflected the of be financial which be statements, is call, our A to our beliefs. metrics release Relations allow that no website the will required statements. operating from in and of on performance Investor and forward-looking the measures those as current SEC's call and undertake or website. section Relations risks results We as the uncertainties, Jason. the reconciliation it found is law. Further,

Jason Trevisan

Kirndeep, thank joining today. all you those to Thank us you, and

needs. outstanding offering of across pleased results. business. our strengthened report that revenue and the partnership XXXX platform, last delivered our As dealers the theme our we evolving to with This we further value year, I listings year, and expanded consumers' our accelerating product of proposition our I'm and foundational shared beginning drove Throughout at enrich to growth the was in meet dealers' monetization and

our between with While smaller the that to expanded wholesale acquisition partners. Collectively, and for profitability milestone fortify coupled accelerated Revenue toward ability strength digital product also offerings, that ongoing holistically expansion Canada, the our serve dealer significant achieving achieved and vision which progress platform. of our the believe offerings. of retail increase dealer will In international attract new connectivity completed wallet a the of to of the operations allow efforts, and data-driven an size, customers, the diversified activities every in retail contributed existing transaction share us the transaction-enabled end-to-end our product our has and innovation the and range base the U.K., insights in monetizable we CarOffer, December, we growth ultimate customer our to of we This market. profitability in acquisition, in marking CarGurus of results. accelerate

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financial let over our turn to results. it Now to discuss Elisa me

Elisa Palazzo

you, and Jason, afternoon, Thank good everyone.

results, excitement into Before quarter fourth I express about the to like dive I would CarGurus. my joining

pivotal platform as cycle new largest with broadest of dealers full transaction and Our and build of in we an profitable the and U.S., of moment joining innovation ROI and to and growth reaccelerates business foundation product the transaction. I'm a its Marketplace in represents life vehicle inventory a journey business the the at existing enviable captures It highly unique asset and that company enhance to listings leadership. a digital is capabilities unrivaled continue a our features. product network the selection integrate

year-over-year what exceptional substantially early business of we be X innings my our to now our will year, of in to sequential in which potential the in fastest to Since achieve are our We accelerate mix franchise. I and I rate unlocking believe has and revenue continued results. our the experienced building will last vision and changed Marketplace commentary, years. versus turn full both highlight trends. the momentum growth We business, year-over-year nearly in our

While our margins we geographies. non-GAAP all expanded our and leverage segments in cost continue our and to business base gain across

closed, now efficiencies transaction we assets, discipline As business the financial operational the of to achieving profitability. on return the CarOffer full look focus and as control maintaining plan and to we we to have

million, our million X to year-over-year revenue, higher listings market rates quarterly at the new nearly expansion the by dealers sequentially several twice as fourth take process was wholesale and as by much in in fourth $XXX by XX% stable of and achieved While XX% product year-over-year, active date. Total down quarters, $XX expand in continue business driven encouraged monthly In nearly to well approximately this advertising in our revenue addition we quarter, migrating quarterly million X% we Marketplace progress expansion $XXX quarter subscription we the driven to and largest sequentially, operational current revenue. Consolidated MRR up QARSD average lower primarily base. revenue the revenue fourth the quarter, to expect tiers. added recurring quarters as as driven are year-over-year, for we years. approximately revenue by dealers as was the grew year-over-year XX% up X% and existing XX

fourth X% dealer-to-dealer Wholesale $XX up the revenue operational in In by sequentially, quarter, fourth million volume. was to driven a we X% quarter, for the down year-over-year improvements. continued increase and prioritize transaction modest

but a market conditions are path on to remained overall normalization prices While elevated. muted wholesale as remained

as margin $XX Lastly, lower revenue decision XX% arbitration continue and reduce revenue. Instant down third X% down prior our meaningfully discuss Offer, our XX% now basis. year-over-year the continue Fourth XX% sequentially, in year number the quarter, limiting generated gross and highly the in a meaningful of mix business, was our quarter. XX% in quarter, sequentially, as in consolidated fourth XX% fourth XX% expenses as in Marketplace which in and gross and quarter. the transaction well to Max million profitable revenue quarter, revenue product ASPs reflecting non-GAAP our The profitability in prior XX% XX% million on volume for Cash consumer-to-dealer high-margin and due up and non-GAAP the of the down Top dealers expansion subscription-based was Offers. I quarter in non-GAAP Dealer to to was in opt product, year-over-year towards year third our product, the represented revenue growing compared shift margin in will our for the fourth XX% quarter $XX to the from

basis gross individual expanded basis sequentially, mix. business product points and year-over-year segments, favorable approximately points the Marketplace non-GAAP by XXX Within margin XX driven

digital Our predominantly expenses as to non-GAAP margin I $XXX up quarter driven year-over-year and to as was non-GAAP well expense cadence limit fourth relatively early Cash marketing driven marketing the lower for points X% Max operational reflects sequential onetime decision period decrease which investment in Instant by referenced were sales down X% flat spend, XXX marketing items. Fourth by as sequentially, million, quarter Offer and gross XXXX. earlier typical favorable sales fell a sequentially sequentially. was as well X% and in year-over-year and basis our operating The entire wholesale improvements

were million, in but the to year-over-year fourth our Our pace X% quarter. expenses $XX quarter and fourth we slowed development technology hiring as down product, grew of X% non-GAAP sequentially

we fourth points year-over-year the margin generated up in Consolidated EBITDA operating quarter result XX% primarily of in up wholesale approximately EBITDA adjusted expanded grew million adjusted adjusted EBITDA well wholesale of $X year-over-year sequentially. Fourth $XX a quarter, quarter, approximately million. in sequentially. was favorability. expenses, Digital adjusted $X fourth sequentially some million was basis approximately sequentially margins basis XXX EBITDA consolidated and XX% loss $XX and segment approximately million and driven and XX% was As lower including expansion year-over-year non-GAAP was Marketplace X,XXX improved XXX% margin one-off favorable approximately as mix and and as items. one-off period by XX% prior year-over-year the to points

quarter down fourth the quarter. Fourth well million in period. short-term the paid million year-over-year. We The from Fourth of GAAP with million cash, in digital related sequentially. per quarter. income share million, $XX approximately We million, loss lower would the EBITDA prior common $XX up to adjusted purchase for million GAAP stake quarter earnings the investments, as operating in $XXX incurred compensation Excluding share attributable GAAP a in year to year-over-year, GAAP the in cash flat million was expenses share-based onetime reflecting Non-GAAP December shares CarOffer. the quarter for that these fourth connection EBITDA cash CarOffer quarter, to as operating driven $XX outstanding. I few ended was wholesale have well items, a consideration quarter. fourth in was metrics million equivalents million, $XXX down $XX acquisition $XX increase now compared redeeming the $XXX as will as in XX% with was of incurred reduction diluted the by fourth and been primarily in adjusted the $XX third shareholders end the $X.XX operating $XX cash discuss balance repurchases includes the CarOffer the decrease of of which remaining include items of of net in the of total million approximately remaining the units loss consolidated

outlook fourth shares an of of our X.X of million aggregate XX% program we $XXX the program Board repurchase remarks our in quarter, million XXXX. that During $XXX share we Since equivalent XXXX. I shares, for December with quarter. of our November first purchase for the we as price in $XXX million. to prepared repurchased repurchased beginning in approximately buyback the December XXXX, capital will close million In our December announced XXXX, authorized additional expiring my an outstanding

consolidated of We $XXX be expect quarter million. to the first our range to revenue in $XXX million

$XXX the with between be to momentum We our Marketplace quarterly million the business million, the quarter up year-over-year. expect X% in revenue in of range continue first expected to and to in $XXX XX%

EBITDA. to Moving

non-GAAP the we first as We in consolidated transaction to adjusted operating expect lower expect of $XX sequentially marketing launched the million with $XX quarter campaign, our million, to Your expenses primarily the brand EBITDA in by driven volumes wholesale in a quarter, Way. we first quarter. basis, first Car, our be increase to new non-GAAP spend Your sequentially range On

marketing typically in we spend first fourth addition, in dollars million the up after ramp reduction a our In by back several quarter quarter. seasonal the

a XXXX, rest the operating roughly we business year. the revenue remain and expenses the to with of expect decline continue as for quarterly of forward, grow first in line marketing progressively our and to percentage throughout to Going costs as quarter we

like earnings $X.XX. With expect range in I per $X.XX call open that, to to we Finally, of would Q&A. non-GAAP share for be the the to

Operator

Our question Fong Marvin from Instructions] BTIG. the first line of [Operator with comes

Marvin Fong

I'd just CarOffer. about thought ask I

I guideposts getting where a maybe way achieve a you little want maintaining I of couple and investors, kind times of the to that threshold to disclosure. focused in or maybe some maybe looking on we, that, to right? financial more could on that to think continuing you observe you that could operational just be add you're as detail your if that efficiency segment, in to the the guess you're discipline of mentioned

question my there. So would maybe that [ be ] right

Elisa Palazzo

Marvin. question, the for Thanks

foundational our So preface Wholesale. long share this strong for the business. opportunity the are tailwinds, space is opportunity to incredibly excited there penetrated we Digital under in with an It's an market space sustained gaining synergistic with let very over listing us And secular term. about potential that demand me in long-term

the the quarters. of business return of profitable and are in the number way in rebuilding several -- initiatives and process our growth therefore, leadership. a to we have to next We estimate we And

on commentary quarter. on my the focus will first I Now

our our intensify before continued products efficiencies to focus enhance externally to have efforts we our operational shift efforts. our drive and we go-to-market So

transfer which have service transportation center several last other We a shared arbitration our and as with transportation our quarters, fixed CarGurus the base improved driven rates in relates the we reduced lower inspection, have creating initiatives, title are dollar to cost it one terms process capabilities, we have ]. Through support [ and in our better also of for and functions.

So strategy. well we to against confident the growth are return we want we do anything? our believe and executing will quarters. Sam, you to next add profitable few that we're in

Samuel Zales

I think you nailed it. Thank you.

Marvin Fong

That's terrific, Elisa. for didn't full some Maybe guidance, year. but provide did about a and you follow-up on year you commentary -- sales understandable, the is provide which marketing

And being wanted of relatively So we the for saying confidence before gives that any what year? just that tying that of kind to expect IMCO the sales you year kind major we this it advertising rest for flat you understand to provide shouldn't could behind were push spend? for you about what what saying you're of take and the marketing outlook that should

Elisa Palazzo

we in -- is OpEx and me So and our -- on marketing and and will comment main step take we the back affect that control, factors comment visibility fully let between so the spend QX. sequentially believe have QX the a

so of spend. media one first seasonality the And is the

to down -- we look, it throughout back typically, going We're spend will expect the it my QX. remarks. QX, expect we media per as in you our constant and year take If to we in keep prepared up

and in it And in also sales remarks. which Wholesale. Digital investment I partially campaign, mentioned which second really new is my prepared is a second driven The planned the is our portion by branding marketing, of -- one in

approximately repeated in that, We said we $X expect So we had in one-off QX. million. favorability to don't QX, be of that

forward. the going key of OpEx are these So drivers

least expect revenue momentum as continue we and expect third as OpEx continue throughout mentioned year. to remarks, also pretty point to the in marketplace while we as throughout expect Now expand quarter, at progressively percentage decline or marketing it's out that year to again, OpEx constant to spend we prepared important I our franchise remain to my until the and and much we the of the

Jason Trevisan

just So Marvin. reiterate to that,

of expect a So gross to a over as marketing a or year. profit as percent result, we percent the and sales as decline of revenue,

Marvin Fong

Understood.

everyone. terrific color, That's Okay.

Operator

with Our line of next question Rajat the comes Gupta from JPMorgan.

Rajat Gupta

earlier first Marvin's Great. I up on just to on the guidance. question wanted follow quarter

So down sequentially. sequentially. look the of the if the low of roughly But revenue revenue on $XX at million is kind guidance it's guidance onetime fourth EBITDA, up and I quarter, flattish if up end marketplace to in $XX exclude Even the business. the the between $X OpEx imply it like million something going $XX we million would adjustment CarOffer million for to Marketplace

further referred to? quarter. Maybe were even in have you driving seasonality? to else that's lower CarOffer do in think volumes there by Or the Or it ballpark? is accurate that's such I driving you the anything what's that with follow-up. the EBITDA spend all is of it respect is pickup? if mentioned -- is, just First, transaction down. first I material And marketing a mean that driven or And quick you a

Jason Trevisan

It's Sure. Thanks, Jason. Rajat.

There's a drivers that expect not quarter. It Elisa There a that expense. There's there's full are of don't QX a So just element. element. from we the a marketing lease about the nonrecurring was benefits yes, seasonality to element talked QX. small largely perspective, brand in

that of lot revenue there's a -- as well. seasonality so ad And and

by of And Marketplace growth. and be those midpoint has offset so the would guide the

would we at growth so And end. high expect mid- there the to

Rajat Gupta

marketing there year Got about it. quarter the forward? sales think now relative profitability Got the in rate? this for curious profit And like efforts some Is it. Just exit fourth then profitable. we ramp as and U.K. markets should the on a those to how international to improve there the going well and like both contribution Canada just in businesses,

Jason Trevisan

introduced and a perspective, doing also Yes. The lead paid. We've international well volume some businesses as also are quality both well both doing as well from quite organically new products. and

there momentum investment the momentum on and in is -- so building that with in or some And reinvestment marketing. we are elevated strong,

remember our quickly, of conscious if ago, in may also that to time. a volume too in U.S. we're sure you much Although to enough business grow lead years it period several we like short make tough -- it's monetize

growth. lead given we're so how in reasonably prudent strength And the being investing are much organic there the all we in

really spend. them it's also to reap profitability a crossed without with being good So or able those increased them having marketing into margins but to fuel story feed having

Operator

Our next Erickson RBC question comes Capital Brad Markets. from the of with line

Logan Reich

This Brad. is Logan for on

does the that a are sort your positioned marketing curious how car light years, off-lease And dealers. and potential the X pricing's independent car was little margins because through OEM and follow-up off-cycle spend couple for on or guys impact just production how the the curious bit subsets How that your changes out past sort used of inventories expectations between year? dealers' play the decline cycle franchise as with those Given a used over then of of does the you of just of year. comments marketing and between of just throughout affordability in just

Jason Trevisan

It's Jason. Logan. Thanks, Sure.

So the from inventory, car in we're are you expect. seeing growth changes inventory as that new would biggest an perspective,

We believe growing a I car, new for continued but also, lower And not inventory, seen hit much used it's to car, in not new slight close levels car. levels much which have back closer. increase don't as yet was for used far depths now car nearly and still back pre-pandemic pronounced to increase, not is pre-pandemic as even faster, although

the understandably plan times our does inventory a more on which business. Marketplace rising high, quicker, they are to market to lots, that Dealers feel tends move compelled higher want especially floor so for thing are. to to dealers And turn rates good be if financing cars

not are off-cycle retail that looking sell only means wholesale. as specifically, also to it returns, lease but ways relates to cars also those it for And so dealers

CarOffer. that a be to should tailwind so And

of to the car. price that in affordability, One was terms dealers have of headline the challenges X help In the that. XXXX. X is the ways to headline And lower of typically combat of challenge, yes, one

We tend to a than more market insights so ROI like more think for that and them have lowering to to we as that price, them that with know platforms is help other aggressively. ours better and give marketing well. is they The to lower but with do we tools price also

does new, continues need in though, sense a the think used, than between a relative of car with did car. to where be, There still will we and lot pricing affordability come to -- new 'XX in So OEM to incentives do interesting bit new 'XX. better dynamic it help that quite down used make on to an is

We generally But we're trying be it's again, dealers are think prices or their inventories regardless demand whether tools actionable to think we and and help of will going a rising more demand to our falling manage rising give up. consumer better. result, or as more insights be businesses to falling, So them better. or

Operator

White Our Davidson. D.A. next Tom comes of from with question line the

Thomas White

like traffic guys Jason is Just customers element My a that Dealer And just on if that the will terms dealers I'm exactly? product you maybe into just you curious it of couple how are the sellers adding for Top on the the priced little kind I'm get of Car, that? the look color Offer offering or offering there Just for curious could any turning What the into on stats product. just then today. you you the Sell think give you about a impetus buyer of mentioned foot in next whether are way converting value car. have they more on that whomever, their pricing guys this? intake what's bit tool

Samuel Zales

you having and the to going that X/X so -- so. and Sam happy service saying, that a of comparing customer something to buy-sell. is conversion KBB we choice wholesale who last dealership, Thanks are to opportunity I a advantage from priced consumers something but this I'm inventory, about to We're in market, might us this And consumers, asking. Zales. to I sell the They on with do as have we the said a for seeing Accu-Trade built dealers, as the as well. our I mentioned it asking into products quarters. tremendous customers saw means, car, reminder and better. the Dealer or for may We're in in and unique with couple white which have buy buying the Top different, glove is, of this on take of something consumer's offering am rates. with gold completely like a IMCO, dealership it, based a they're as to low results them talked We is the the And has Tom, which really base product combination to vehicle. is coming an Offers, car earlier high it I'm know, be as

So tremendous we're seeing conversion rate.

still of as the in are know, We a you country. We're limited market XX XX% markets, in launch.

every rates the is we're heard to So far, conversion in work customers our that's from and so able of I've the other products with one customers involved feedback beating those marketplace.

use as results. is our You consumer others experience this market about forward. and that to by feeling we access of the that dealer to that's the for number last both is still, experience that a creates the it has leaves asked to early program expand in We're fourth a reasons. goes fair between this launch of objective about able One looking consistency same universal year as the inspection and type the sides capabilities be to forward their but creates vehicle. the intake led experience. each is the the continuing look create of say so expanded have on want we're importantly great the experience great It and to on. that very, same as We're to every more but quarter consumer We marketplace. What dealers that the already to of go tool. for for of encouraged strong in using We're consistency of year very further we started to we value

Thomas White

Okay. And offering. it's subscription a

in show So CarOffer? Marketplace segment? in Or up does it it your is

Samuel Zales

that already product add-on. It's product. a does, and lets subscription sell a dealer talking It's Marketplace going Tom. we're you It's an saying a vehicles. now about It to listings

to out without consumers, join hardest because Here's another high is marketplace from of and gold which allows cars we more get gross that it's subscription you said today in returns. off-lease product find those the the buying margin to with

Operator

with comes line question the Riley next Naved Securities. The of from B. Khan

Unknown Analyst

Brian on [ ] is This for Naved.

Just X for if me I may.

first, then So it you percentage improving terms scope is changes? mentioned like that significant further discuss of ABRs see across of price XXXX. spending CarGurus' seems in revenue, the had dealerships in secondly, Can you And and ad may through changes the industry.

guys the about So thinking how are opportunity there? you

Samuel Zales

X want that dealers One QARSD use. rates when [ our we ], price market major pricing QARSD highest-ever levers On I come you Sam came changes, or we in. at growth to it's they just is X success, our Brian year-over-year have because Zales. remind

a Second to is dealers upselling or higher package. premium

pricing also product unit then The third are growth the attachment very is our rates, ABRs strong. with which very, core and

below price is pricing It's of ROI not the for we're package that On It's side, grow recognizing couple seeing with annual the your and dealers, to a that that continued ROI the a the and require in just cases, for this as we're of a and [ in many that saying ]. But just review dealers of a a here's and different working saying customer on. higher priced that market your in them rest offering you're be business, things. the going they're below tremendously value get might spend you more serving is business an increase. and is market straight program retail market better paying understanding may our where success to taking

If you to point there, to get here's stay in price it. the want into

program want pricing choose you you could isn't product to leave the And if a -- if Here's that if that. lower-level working. those

our don't quarters. work than more take So onto grow as of X QARSD. when you've one as And dealers want grow I offering before, say program options the back that program, of XX% that to tremendously the we're to levers within them heard come to multiple

ROI ABR we specific the to customers as be kind that then still going the but rates. we results are. are to continue a year, well thresholds of going they leverage but see of continue that same fair about, that because the to they'll give I'm about not that to aggressive a have confidence XX% on we're our And ROI, new packages trajectory that be We'll positive give we number, offer share them process. last of CarGurus. So as the any hit in our and year we market to underpriced as started with below work take customers that to meet as the the

successes more. So performance our revenue see growing our of will we as From optimistic in as strong QARSD and quickly are we're is business. that continue and with spending our you're Marketplace an are perspective, that Incentives process, to it in hopefully, has. year business to this OEMs the out that there a ad continue seeing excited cautiously

advertising strong. upfront interest year-end is Our

And performance will so we us XXXX. that be a returns believe to in for that solid business

Operator

Jed question line next comes from Our Kelly with the Oppenheimer. of

Jed Kelly

around one, up ABR. the following you -- Just sort the said last of on of XX%

getting expecting get question of interest sort is the trajectory rates the think rates pressure? out. potential the we dealers? we and back How as the same should view of your pushed as demand about and QARSD amount of consumer of second my Just of conversations half And comps cut with are pricing you tougher, keeps pace the interest impacting then

Samuel Zales

underpriced our the think really I'm take I'll levers that and has use fueled the ABR. our which in really and we we're all sales message. to audience it's to closed continued new succeed Sam It's going the more dealers, to connections for for continuing front. our providing by worked important ABR growing, see to more is our successfully leaning that means do we're that for Deal and It's We're on customers. But by Jed, Zales. terrific way, QARSD going tiers. that which effectively I first to premium Thanks. the now, a customers the for is pricing launched our consumer a on our funnel there. premium upselling growth on Digital down keep working close product, this year. multiple into is packages. so customers, Remember we've audience, to And last continue

X So Xx the very our low Dealer We're pricing. funnel those subscribing and to Offer who go upsell our product Top product then in to as we to attach. Digital another to gives lease. And those continue add the revenue. more get arsenal we'll on at closing shoppers access premium dealers to general to into to dealers us are continuing they're packages, work Deal to subscription

combination couple our reaping the pressure coming side what the on you I'll and what of your of and we're saying off providing to be customers, of a those not will I'm into of to examples it more just customer our think us know us to weeks closing just give But our business. I leads. That pricing opportunity the revenue there. So a kick tells ago between there's value we dealer continue of get to XX% we're managing

think seeing. you're us will this feel Elisa's very going feel comps the against we our going confident And there's makes of that very we mentioned, so do bigger, even And remarks we're trajectory though -- business forward. strongly Marketplace about be growth

Jason Trevisan

And add, on can there your interest part third on just then with I and consumers. impact Jed, rates

spending spur tends that So budget to more. And ago, strongest in And that but and rising it's rising few And necessarily dollars I that X factors Marketplace would turn adding not our it cited dealers their remains marketplaces are they're reasonably help that as fraction are dealer, ROI spend times. also dealers. a as minutes I marketing reallocating That business how say to most dollars. they today, tailwind marketplaces, within the small of want for ROIs them. we a highest mentioned for remember are market yet a do a and it's for often to one inventory the

them for to So pretty it's place a safe spend.

consumer down were mixed marketplace. were If to come to interest increase, to rates a have our demand and impact on tends that

new rates look between X% dealers. ability for And the SAR change you there's if we high at discernible our on interest don't SAR, And XX%, correlation not see or bookings by expectations a and if a sign our so instance, impact to either.

from fairly so immune that. And it's

value say -- to though, deliver but not stream it's in of is on advance high small revenue them, growth deliver and finance area volume quantity a we're help of leads final a I the it's we're to the and that or we is doing, consumer is confident to relative that finance with and from which customers the connections our add the are one very and insignificant. just and we simply which other that data in to basis, would dealer of that them, that. The are quality ours, margin thing more insights trying even we insulate marketplace our and to lot One tools further and leads, independent marketplace to

rates have approval rates those As interest gone down. risen, have

And suffered that has little bit business so it. from a

higher interest see then rates down, to forecasting. currently were come growth we're if so would we than And

Operator

comes Pierce line question Company. the next Chris of & with Our from Needham

Christopher Pierce

I adding the they from side the XXX% future. kind given dealers about Can to Are just of the of the in dealer around talk had under a marketplace? QARSD want shared sense you're you get they back platform? Or surface guys what's on detail you've went new away? the to happening to the the

Samuel Zales

And point. is here. take Sam within a of percentage that mentioned which on coming price That's to the outcomes, are I Chris. but a say it's X percentage, mix. Thanks, a quarters. dealers than small back who I'm ABR not going more XX%

price who then months dealers a, get and the living market's is marketing dealers look The So my down, off gosh, as let consumer card that demand little bit. again. back is the in are for for sensitive, do. the getting very for stay some payments say, particularly we in, on was they so They're of cases, they'll will me off a ABR say, my come Jason off process, the business shrinking, get mentioning, and changed X just small independent during program the credit

overall, we of see from. it's types get independent to spending and still the or we're independent you there, And be of keep advertising, a purchase been make in the saying all number there significant dealers different that TV, to marketplace. they customers difference segment, that lot want money them Jason which one third-party are are our getting they're most biggest our that a still media another. more a on and not TAM them turnover out at look So those But sidelines new is you who business, the other but for have to on MRR not forms local important they're doesn't I trackable. vehicles because of winning mix still to consumer hard when believe. And there's may small the to over, reason radio, franchise converted mentioned, on even dealers of to

segment biggest the with continue dealer about. that's our biggest opportunity and driving ROI, new one the the to ads to growing asking go that me fulfilling audience, you're Let

Christopher Pierce

sort into with this time this can you that more turn lot has referenced, dealers' you you the the on helping you because put data their that send I'm new led information? something dealers that product? have to with. a adoption, of like then has right data or that you already And And the Cool. be Is have what have CarOffer Okay. kind where cars because dealer place data to is send inventory now asking help what in this really to restock exists dealers you to of hone plumbing or to

Samuel Zales

great It's question, Chris. a

data. the have We

to We our we inventory of how information go get site turning. look are at from our in quick that see dealers which inventories those our when the X have consultative We're have just sites. of the They connections we want them operations to pointed we our more So to ] turn are help to don't their are able Jason asked ones vehicles then at and time. [ look And what and on us the effectively. retail to run leads off value is feeds dealers. out, provide dealers things. feedback provide

data, is is it So what they they're saying -- the combined all which demand way. say same consumer and

You have the largest audience.

consumers then tell is inventory consumer You geographic to looking how me by are I what are vehicles and where on their for, be what market, today, turning us local have I turns vehicles can area down us what a vehicles tell my searching should competitors and those for demand tell sourcing.

CarOffer. combination that the here provide our can wholesale retail CarGurus other and marketplace So is opportunity no combine the to and great capabilities with of

other to and up vehicles. realize CarOffer buy you Then a of you say, demand You vehicles. in these got types setup is matrix a have these you consumer

mentioned building and the Next the be a And retail me not but CarGurus away to highest way. and his as side -- of which on You should the too on should in the be Deal Rating, matrix in consultative successful business of strategy opportunity eyeballs Jason to much remarks, the on them get I allows vehicle winning is more dealer what around acquisition consumer the profit. planning helping platform that become price your of gross side vehicle point for Best giving

to our they're process this price looking feedback vehicles? year marketer And need the that is entry leads was a your this from have kick-off at of have CarOffer our can I those sell. me the a helps business asking you have because more only and So maximize of and provide sourcer platform dealers in the in and is dealer also meeting, the connections. me to sales they're meeting profits, I to synergies market with best my The for. we entire efficiently as run kick-off data and that's the market. at what between CarGurus we the think But the

Operator

from comes with the of question next Our Citi. line Ron Josey

Ronald Josey

go Top go XX% to Offer. I driving metro the XX I What unlock attach we're know Car, U.S. about needs My had the overall on dealers X. would to us the are insights products live XX% nationwide? in rate quick Maybe growth. what what's clarification Jason Sell us attach helpful. -- more Dealer any and population. covering Sam, be happen here that the a to on with of specific talk maybe multiproduct about And metro just to and areas. Talk increasing areas the And in just then of to more we live year-over-year,

Jason Trevisan

it's Ron, Jason.

or -- is been rate, multiproduct other volume one. we these saying, types differently, to their margin. smarter smarter how which give Sam certain particularly products -- for of -- Digital has another multiple the to of insights is more purposes actually help as yes, have that all whether -- expansion but dovetails Deals what lately. some attach to attractive it is lot use of it's is dealers that comes cars help as Geographic cars have mean, examples more source Highlight of it we be would then well. So a them I down more just key it's products, product another was know specific with And is and their these market as products to to source of a

them building, the helping I the insights package that. products We're we being smarter also, are portfolio much with optimize levels. giving coupled about we're so think think, And we're about to how of the them,

of some attach, for more so much for just into packages are it and providing much but deeper not multiproduct who our of exactly dealers of. platform because cousin are that's getting these higher-level out And insights we that's

Samuel Zales

And Sam. Ron, it's

said repetitive we'll excited think based rest the we've heard years on that first experience. about everything built you'll we've the We've about, we're about deliberate dealer tough the of as talked. this country, over a is offer be which theme I expansion have always to The here. consumer but

watching first of experience consumer our we're NPS new optimal who scores experience now, the You that. money in use it, out which creates a white We're this a products, allows between a the all right to that might experience use this market the at of knew intake what them, in integrity of tool I'm and consumer glove seamless ensure and understand I measuring bypass IMCO consistent. were, consistent there to being set. with the dealers than choosing that say our found me, tool many local more experience consistent at to same that be if one local and to high that why something going we're is process. Remember, is point price offered what dealership and to the I quality, different if -- using Hence, the the you the high saying dealership, and be but get want consumer

are dealer experience making was possible. is consumer in close experience. rates the of two what kind Number question we high is getting. as one So Earlier

There what a set who the of seeing acquisition dealers dealers high a Now we're having don't who consumer from a consistent joined approach. who intake close rates program have consistent for of process are vehicles. regional tremendously as are is those

have retail than different process dealer another location intake one. one might So a

part successful possible. to say, would high your ROI I and consistent as as the helping to So Dealer from that okay, sure economics. consulting dealers those possible, say you consistent last are those And by be is as results is subscription your We each. Offer. The are program our different be make as will close rates want Top will on to

as think in market the out they as we So reasonable. close pricing. change pricing gone the But successfully are, if rates that we've is the we continue with might

CarGurus. it us not access So to at economics rest the of about is get head low going be think to the the on be and really saying we now now. that right we forward, balanced right our ROI market. I'm too what do for the the important of might subscription it's dealers' to before between we side as going But

out that effort. about both the maximized we and thinking we're point for sides when for making So win-win do that sure nationally, of pricing roll it's

Operator

question the John Our comes of next from line with Colantuoni Jefferies.

John Colantuoni

set barriers you're any investments product I working offering wanted expanding before are dealerships? are that to thinking or adopt dealership product? could Digital are And Digital market to Or every the Deal. for certain across still likely the types there when Digital for ask about you When more to thinking adopting address the partner Deal, it time? less the addressable over that there of about opportunity technical Deal, dealerships about see

Jason Trevisan

John. Thanks,

and make consumer required better experience. onboarding to, So do experience, I the they hard leads. dealer, working at There the the to sales we're sort pull like modest there's say, faster adoption Deal they to no structural dealer need Digital would is really But continue technical financing flow team leads optimal -- for no, their there's and need results barrier handles a always how things a really sort better dealer not change say, embrace to there. and of to really some, at the I of of would

So work experience information Deal this our familiar consumer site for and good not instance, on dealership is has not with not that if consumer it's then the all leveraging really and a salesperson a -- Digital the consumer is into that, does it's and the the walks given.

all. none is big I've neither climb it a not bit the for -- change. at It's even little but does of to mentioned lift dealer, so And a of require a big what hill

dealer wouldn't really does consistent why that, It from a reasons Aside not cost there's money. adopt.

be say where consumers they they in be. process want to That's transaction want may do to They more more, say some online. most to a it. price and sensitive of the cases, lot the So of and

consumer sentiment there, that's and is is market the And so where think headed. we

seamless more On do flow and the obvious on make consumer to it side, more we a have site. do our to work

we resources find, part central of it's easier it's there easier are it's so do, flow. so more and put to more just going to the to And that

Operator

Our comes Doug next Research from Partners. question of the Huber with line Arthur

Douglas Arthur

questions, one. just of it lot A so to I'll keep

see are Just say, on a done we close, Or that now? lingering the GAAP with CarOffer going GAAP QX? basis, numbers, is the the in some true-up to is true-ups in

Elisa Palazzo

so true-ups We should The forward. in the any going we is We $XX don't transaction going million in the it. don't recorded expect closed, to be expect to transaction, forward. see and compensation anything approximately but share-based related fourth that quarter

Operator

of comes UBS. Kunal the question line Our next with from Madhukar

Jungsuk Park

UBS. questions. is This on from Jason of I have Kunal a couple for

also recent unpack you a seen little trends the value compared whole dealer [ to CarOffer deal So And first, bit more into could ] the of offerings. please proposition differentiation the double-click within the you've competitor space? the and to

and power And I hear more base. pricing to have there was cost instance, your curious [indiscernible] your about I follow-up. a driving of customer For the what's

Samuel Zales

of a Sure, Jason. proposition moving out business is provides model auctions. market there that on It's the different, some the and exchange would completely the sell you there Zales. like vehicles And to and very CarOffer would for stock the is an is the dealers instant price price vehicles points, -- their platform, Sam wholesale dealer very players and is to digitally. That's dealer What like a trade purchase its today. of that almost a digital offering simple, at doesn't The relies a capability. It wholesale are a auction the who that, are buyer a we've industry go a auction as seller transaction, model watch and transactions capital or more timed sit which digital most know, value creating light in vehicles points, by. the brings require that pioneered digital that to

larger of said and So new players commercial it the works it's for marketplace. larger-scale vehicles. space as and innovative perfectly in solution We've the It in for a different acquirers works that completely well. the

value we're point our the -- community market, Zach down it those inspected new going with improvements In Elisa them. X dealers of We around. engage few we they is business over in the unique inspecting with They in last a go-to-market We've because with operate CarOffer. veteran on. And going quarters. And done make reason enhancements. a the that but then that's at We're from down leader, business. going just forward. requires you've reduce a platform that's else has. this Hallowell, tool sellers we a business going because succeeded about excited and business upfront, owning We're the that digital the sure looking what they're place about already to got the business business to that further we're push we're more levels adoptive potential it's it we're which predictive The that set team a the and new quarters running are utilize to -- headquarters providing the tools new help to it before vehicles a to that leadership turning talked were mentioned continued leader at than management focus, to dealer phenomenally a are our of though proposition And operational we've programs. We AI-based turn front. now to keep tools, inventory into tool going looking of have months running wholesale to improvements that a so the the a the intact. excited We're in in to a consultants, about operational watch is market seeing product us price on that with have take is CarOffer arbitration and couple consultation, to one and no to CarGurus we at from take we're

Operator

questions to this time. I'd like turn Jason comments. There to at floor over the for closing are Trevisan no further back

Jason Trevisan

dealers I wrap throughout QX and confidently much, in and buy and for thoughtful we're up most become sell just the sharing XXXX. exceptional helping of for we have any the how how who to to thanks want for #X digital our Thank proud globally and you probably much evening are positioned this contributed vehicle. questions. and to performance joined everyone destination by our importantly, I of well so us very and employees to to want all consumers thank who think conveniently we and us XXXX,

Have everyone. good you evening. a thank very much, So

Operator

today's concludes teleconference. This

lines You Thank disconnect your at your for time. Goodbye. may you this participation.

CarGurus (CARG) 26 Feb 242023 Q4 Earnings call transcript