CarGurus, Inc. (NASDAQ:CARG), a leading global automotive
marketplace, today announced financial results for the third
quarter ended September 30, 2017.
“We are very pleased with our third quarter results, which are
highlighted by robust top line growth and ongoing profitability,”
said Langley Steinert, Founder and Chief Executive Officer of
CarGurus. “Our strategy of building the world’s most trusted
and transparent automotive marketplace is delivering a disruptive
value proposition to consumers.”
Steinert continued, “The recent completion of our initial public
offering was an important milestone for our company. CarGurus
now has greater brand awareness and enhanced resources to execute
our growth strategy and further extend our rapidly growing
leadership position.”
Third Quarter 2017 Financial Results:
Revenue
- Total revenue was $83.0 million, an increase of 56% compared to
$53.1 million in the third quarter of 2016.
- Marketplace subscription revenue was $73.9 million, an increase
of 59% compared to $46.5 million in the third quarter of 2016.
- Advertising and other revenue was $9.1 million, an increase of
36% compared to $6.7 million in the third quarter of 2016.
Operating Income
- GAAP operating income was $2.9 million, or 3% of total revenue,
compared to $3.3 million or 6% of total revenue in the third
quarter of 2016.
- Non-GAAP operating income was $2.9 million, or 4% of total
revenue, compared to $3.3 million or 6% of total revenue in the
third quarter of 2016.
Net Income & Adjusted EBITDA
- GAAP net income was $2.4 million. GAAP net income
attributable to common stockholders was $1.0 million, or $0.02
per share based on 46.6 million weighted average diluted shares
outstanding, compared to $0.9 million or $0.02 per share based on
48.1 million weighted average diluted shares outstanding in the
third quarter of 2016.
- Non-GAAP net income was $2.2 million, or $0.02 per share based
on 107.1 million weighted average diluted shares outstanding,
compared to $2.2 million or $0.02 per share based on 112.2 million
weighted average diluted shares outstanding in the third quarter of
2016.
- Because the company closed its initial public offering on
October 16, 2017, the shares sold in the offering as well as the
automatic conversion of the company’s convertible preferred stock
into shares of Class A common stock will be reflected in the
financial statements in the fourth quarter of 2017.
- Adjusted EBITDA, a non-GAAP metric, was $4.0 million, compared
to $3.9 million in the third quarter of 2016.
Balance Sheet and Cash Flow
- As of September 30, 2017, CarGurus had cash, cash equivalents,
and short-term investments of $85.6 million.
- The company generated $8.5 million in cash from operations and
$5.6 million in free cash flow, which is a non-GAAP metric, during
the third quarter of 2017 compared to $13.9 million in cash from
operations and $11.1 million in free cash flow during the third
quarter of 2016.
- Subsequent to September 30, 2017, CarGurus closed its initial
public offering of Class A common stock on October 16, 2017, which
generated net proceeds to the company of approximately $43.0
million.
Recent Business Metrics and Highlights
- Total paying dealers were 26,553 at the end of the period, an
increase of 37% compared to 19,403 at the end of the third quarter
of 2016. Of the total paying dealers at the end of the
period, U.S. and international accounted for 24,313 and 2,240,
respectively, compared to 18,777 and 626, respectively, at the end
of the third quarter of 2016.
- Average annual revenue per subscribing dealer (AARSD) in the
U.S. was $11,526, an increase of 16% compared to $9,939 in the
third quarter of 2016.
- International revenue was $2.6 million, compared to $0.7
million in the third quarter of 2016.
- Website traffic and consumer engagement metrics grew as
follows:° US average monthly unique users were 26.0 million, an
increase of 24% compared to 20.9 million in the third quarter of
2016. US average monthly sessions were 67.4 million, an increase of
38% compared to 48.9 million in the third quarter of
2016.° International average monthly unique users were 2.6
million, an increase of 55% compared to 1.7 million in the third
quarter of 2016. International average monthly sessions were 5.5
million, an increase of 73% compared to 3.2 million in the third
quarter of 2016.
Fourth Quarter and Full-Year 2017 Guidance
CarGurus anticipates total revenue, non-GAAP operating income,
and non-GAAP earnings per share to be in the following ranges:
Fourth Quarter 2017:
|
$85 to $86 million |
- Non-GAAP operating income
|
$1.2 to $2.2
million |
|
$0.01 to
$0.02 |
The fourth quarter 2017 net income per share calculation assumes
113.7 million diluted weighted average common shares outstanding,
which includes the shares of Class A common stock issued by the
company in the initial public offering, as well as the automatic
conversion of the company’s convertible preferred stock into shares
of Class A common stock that occurred concurrently with the closing
of the offering.
Full-Year 2017:
|
$311.3 to $312.3
million |
- Non-GAAP operating income
|
$16.7 to $17.7
million |
|
$0.11 to $0.12 |
The full-year net income per share calculation assumes 113.7
million diluted weighted average common shares outstanding, which
includes the shares of Class A common stock issued by the company
in the initial public offering, as well as the automatic conversion
of the company’s convertible preferred stock into shares of Class A
common stock that occurred concurrently with the closing of the
offering. Guidance for the fourth quarter and full-year 2017 does
not include any potential impact of foreign exchange gains or
losses.
CarGurus has not reconciled its Non-GAAP operating income
guidance to GAAP operating income, or its Non-GAAP EPS guidance to
GAAP EPS, because stock-based compensation, the reconciling item
between such GAAP and Non-GAAP financial measures, cannot be
reasonably predicted due to timing, valuation and number of future
employee awards and therefore is not available without unreasonable
effort. For more information regarding the non-GAAP financial
measures discussed in this release, please see the reconciliations
of GAAP financial measures to non-GAAP financial measures and the
section titled "Non-GAAP Financial Measures and Other Business
Metrics" below.
Conference Call and Webcast InformationCarGurus
will host a conference call and live webcast to discuss its third
quarter 2017 financial results and fourth quarter and full fiscal
year 2017 financial guidance at 5:00 p.m. Eastern Time today,
November 14, 2017. To access the conference call, dial (877)
451-6152 for the U.S. or Canada, or (201) 389-0879 for
international callers. The webcast will be available live on the
Investors section of the company's 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 on November 14,
2017, until 11:59 p.m. Eastern Time on November 28, 2017, by
dialing (844) 512-2921 for the U.S. or Canada, or (412) 317-6671
for international callers, and entering passcode 13672858. In
addition, an archived webcast will be available on the Investors
section of the company's website at
https://investors.cargurus.com.
About CarGurusFounded in
2006, CarGurus (NASDAQ:CARG) is a global, online
automotive marketplace connecting buyers and sellers of new and
used cars. The company uses proprietary technology, search
algorithms and data analytics to bring trust and transparency to
the automotive search experience and help users find great deals
from top rated dealers. In addition to the United
States, CarGurus operates online marketplaces
in Canada, the United Kingdom and Germany. To
learn more about CarGurus, visit www.cargurus.com.
Cautionary Language Concerning Forward-Looking
StatementsThis press release includes forward-looking
statements. All statements contained in this press release other
than statements of historical facts, including, without limitation,
statements regarding our future financial and business performance
for the fourth quarter 2017 and full-year 2017, attractiveness of
our product offerings and platform and the value proposition of our
products, are forward-looking statements. The words “anticipate,”
“believe,” “continue,” “estimate,” “expect,” “intend,” “guide,”
“may,” “will” and similar expressions and their negatives are
intended to identify forward-looking statements. We have based
these forward-looking statements largely on our current
expectations and projections about future events and financial
trends that we believe may affect our financial condition, results
of operations, business strategy, short-term and long-term business
operations and objectives and financial needs. These
forward-looking statements are subject to a number of risks and
uncertainties, including, without limitation, risks related to our
rapid growth and ability to sustain our revenue growth rate, our
relationships with dealers, competition in the markets in which we
operate, market growth, our ability to innovate and manage our
growth, our ability to expand effectively into new markets, our
ability to operate in compliance with applicable laws as well as
other risks and uncertainties set forth in the “Risk Factors”
section of our prospectus related to the initial public offering
(IPO), filed with the Securities and Exchange Commission pursuant
to Rule 424(b)(4) under the Securities Act of 1933, as amended, on
October 12, 2017 and subsequent reports that we file with the
Securities and Exchange Commission. Moreover, we operate in a
very competitive and rapidly changing environment. New risks emerge
from time to time. It is not possible for our management to predict
all risks, nor can we assess the impact of all factors on our
business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those
contained in any forward-looking statements we may make. In light
of these risks, uncertainties and assumptions, we cannot guarantee
future results, levels of activity, performance, achievements or
events and circumstances reflected in the forward-looking
statements will occur. We are under no duty to update any of these
forward-looking statements after the date of this press release to
conform these statements to actual results or revised expectations,
except as required by law. You should, therefore, not rely on these
forward-looking statements as representing our views as of any date
subsequent to the date of this press release.
Unaudited Condensed Consolidated Balance
Sheets(in thousands)
|
|
At September 30,
2017 |
|
At December 31,
2016 |
Assets |
|
|
|
|
Current
assets |
|
|
|
|
Cash and
cash equivalents |
|
$ |
25,636 |
|
|
$ |
29,476 |
|
Investments |
|
|
60,000 |
|
|
|
44,774 |
|
Accounts
receivable, net of allowance for doubtful accounts of $141 and
$164, respectively |
|
|
10,123 |
|
|
|
6,653 |
|
Prepaid
income taxes |
|
|
— |
|
|
|
1,815 |
|
Prepaid
expenses and other current assets |
|
|
3,485 |
|
|
|
2,789 |
|
Total
current assets |
|
|
99,244 |
|
|
|
85,507 |
|
Property
and equipment, net |
|
|
16,100 |
|
|
|
12,780 |
|
Restricted cash |
|
|
1,783 |
|
|
|
2,044 |
|
Deferred
tax assets |
|
|
371 |
|
|
|
— |
|
Other
long-term assets |
|
|
4,158 |
|
|
|
— |
|
Total
assets |
|
$ |
121,656 |
|
|
$ |
100,331 |
|
Liabilities, convertible preferred stock, and stockholders’
deficit |
|
|
|
|
Current
liabilities |
|
|
|
|
Accounts
payable |
|
$ |
22,737 |
|
|
$ |
16,426 |
|
Accrued
expenses |
|
|
9,953 |
|
|
|
8,384 |
|
Deferred
revenue |
|
|
4,598 |
|
|
|
3,330 |
|
Accrued
income taxes |
|
|
156 |
|
|
|
— |
|
Deferred
rent |
|
|
1,144 |
|
|
|
910 |
|
Total
current liabilities |
|
|
38,588 |
|
|
|
29,050 |
|
Deferred
rent, net of current portion |
|
|
5,701 |
|
|
|
5,673 |
|
Deferred
tax liabilities |
|
|
— |
|
|
|
292 |
|
Other
non-current liabilities |
|
|
969 |
|
|
|
590 |
|
Total
liabilities |
|
|
45,258 |
|
|
|
35,605 |
|
Commitments and contingencies |
|
|
|
|
Convertible preferred stock |
|
|
132,698 |
|
|
|
132,698 |
|
Stockholders’ deficit: |
|
|
|
|
Class A
common stock |
|
|
14 |
|
|
|
14 |
|
Class B
common stock |
|
|
28 |
|
|
|
28 |
|
Additional paid-in capital |
|
|
4,225 |
|
|
|
3,714 |
|
Accumulated deficit |
|
|
(60,766 |
) |
|
|
(71,698 |
) |
Accumulated other comprehensive income (loss) |
|
|
199 |
|
|
|
(30 |
) |
Total
stockholders’ deficit |
|
|
(56,300 |
) |
|
|
(67,972 |
) |
Total
liabilities, convertible preferred stock, and stockholders’
deficit |
|
$ |
121,656 |
|
|
$ |
100,331 |
|
|
|
|
|
|
Unaudited Condensed Consolidated Income
Statements(in thousands, except per share data)
|
|
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
Revenue |
|
$ |
82,989 |
|
|
$ |
53,136 |
|
|
$ |
226,264 |
|
|
$ |
137,377 |
|
Cost of
revenue(1) |
|
|
4,720 |
|
|
|
2,852 |
|
|
|
12,367 |
|
|
|
6,671 |
|
Gross
profit |
|
|
78,269 |
|
|
|
50,284 |
|
|
|
213,897 |
|
|
|
130,706 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Sales and
marketing |
|
|
63,891 |
|
|
|
40,510 |
|
|
|
168,495 |
|
|
|
108,823 |
|
Product,
technology, and development |
|
|
5,796 |
|
|
|
2,984 |
|
|
|
14,153 |
|
|
|
8,134 |
|
General
and administrative |
|
|
5,006 |
|
|
|
3,101 |
|
|
|
14,098 |
|
|
|
8,719 |
|
Depreciation and amortization |
|
|
713 |
|
|
|
432 |
|
|
|
1,909 |
|
|
|
1,065 |
|
Total
operating expenses |
|
|
75,406 |
|
|
|
47,027 |
|
|
|
198,655 |
|
|
|
126,741 |
|
Income
from operations |
|
|
2,863 |
|
|
|
3,257 |
|
|
|
15,242 |
|
|
|
3,965 |
|
Other
income, net |
|
|
106 |
|
|
|
107 |
|
|
|
323 |
|
|
|
260 |
|
Income
before income taxes |
|
|
2,969 |
|
|
|
3,364 |
|
|
|
15,565 |
|
|
|
4,225 |
|
Provision for income taxes |
|
|
590 |
|
|
|
1,226 |
|
|
|
4,633 |
|
|
|
1,566 |
|
Net
income |
|
$ |
2,379 |
|
|
$ |
2,138 |
|
|
$ |
10,932 |
|
|
$ |
2,659 |
|
Reconciliation of net income to net income attributable to
common stockholders: |
|
|
|
|
|
|
|
|
Net
income |
|
$ |
2,379 |
|
|
$ |
2,138 |
|
|
$ |
10,932 |
|
|
$ |
2,659 |
|
Net
income attributable to participating securities |
|
|
(1,401 |
) |
|
|
(1,260 |
) |
|
|
(6,446 |
) |
|
|
(1,554 |
) |
Net
income attributable to common stockholders — basic |
|
$ |
978 |
|
|
$ |
878 |
|
|
$ |
4,486 |
|
|
$ |
1,105 |
|
Net
income |
|
$ |
2,379 |
|
|
$ |
2,138 |
|
|
$ |
10,932 |
|
|
$ |
2,659 |
|
Net
income attributable to participating securities |
|
|
(1,345 |
) |
|
|
(1,222 |
) |
|
|
(6,198 |
) |
|
|
(1,507 |
) |
Net
income attributable to common stockholders — diluted |
|
$ |
1,034 |
|
|
$ |
916 |
|
|
$ |
4,734 |
|
|
$ |
1,152 |
|
Net
income per share attributable to common stockholders: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.02 |
|
|
$ |
0.02 |
|
|
$ |
0.11 |
|
|
$ |
0.02 |
|
Diluted |
|
$ |
0.02 |
|
|
$ |
0.02 |
|
|
$ |
0.10 |
|
|
$ |
0.02 |
|
Weighted-average number of shares of common stock used in
computing net income per share attributable to common
stockholders: |
|
|
|
|
|
|
|
|
Basic |
|
|
42,262 |
|
|
|
44,692 |
|
|
|
42,169 |
|
|
|
44,665 |
|
Diluted |
|
|
46,567 |
|
|
|
48,069 |
|
|
|
46,311 |
|
|
|
48,041 |
|
(1) Includes depreciation and amortization expense for the
three months ended September 30, 2017 and 2016 and for the nine
months ended September 30, 2017 and 2016 of $370, $113, $761,
and $316, respectively. |
|
Unaudited Condensed Consolidated Statements of Cash
Flows(in thousands)
|
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
Operating Activities |
|
|
|
|
|
|
|
Net
income |
$ |
2,379 |
|
|
$ |
2,138 |
|
|
$ |
10,932 |
|
|
$ |
2,659 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
1,083 |
|
|
|
545 |
|
|
|
2,670 |
|
|
|
1,381 |
|
Unrealized currency loss on foreign denominated transactions |
|
(32 |
) |
|
|
(4 |
) |
|
|
96 |
|
|
|
— |
|
Deferred
taxes |
|
(1,073 |
) |
|
|
122 |
|
|
|
(663 |
) |
|
|
204 |
|
Provision for doubtful accounts |
|
164 |
|
|
|
103 |
|
|
|
544 |
|
|
|
334 |
|
Stock-based compensation expense |
|
74 |
|
|
|
88 |
|
|
|
224 |
|
|
|
236 |
|
Changes
in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts
receivable, net |
|
(1,293 |
) |
|
|
(702 |
) |
|
|
(4,013 |
) |
|
|
(568 |
) |
Prepaid
expenses, prepaid income taxes, and other current assets |
|
2,033 |
|
|
|
(2,303 |
) |
|
|
1,143 |
|
|
|
(2,838 |
) |
Accounts
payable |
|
5,209 |
|
|
|
8,943 |
|
|
|
6,409 |
|
|
|
11,485 |
|
Accrued
expenses |
|
2,114 |
|
|
|
1,664 |
|
|
|
(741 |
) |
|
|
2,153 |
|
Deferred
revenue |
|
14 |
|
|
|
432 |
|
|
|
1,265 |
|
|
|
1,705 |
|
Deferred
rent |
|
(406 |
) |
|
|
1,871 |
|
|
|
262 |
|
|
|
2,049 |
|
Accrued
income taxes |
|
(1,915 |
) |
|
|
879 |
|
|
|
156 |
|
|
|
1,190 |
|
Other
non-current liabilities |
|
101 |
|
|
|
93 |
|
|
|
258 |
|
|
|
461 |
|
Net cash
provided by operating activities |
|
8,452 |
|
|
|
13,869 |
|
|
|
18,542 |
|
|
|
20,451 |
|
Investing Activities |
|
|
|
|
|
|
|
Purchases of property and equipment |
|
(2,271 |
) |
|
|
(2,327 |
) |
|
|
(4,247 |
) |
|
|
(4,009 |
) |
Capitalization of website development costs |
|
(540 |
) |
|
|
(440 |
) |
|
|
(1,487 |
) |
|
|
(913 |
) |
Investments in certificates of deposit |
|
(20,000 |
) |
|
|
(8,774 |
) |
|
|
(50,000 |
) |
|
|
(41,774 |
) |
Maturities of certificates of deposit |
|
8,000 |
|
|
|
5,000 |
|
|
|
34,774 |
|
|
|
5,000 |
|
Net cash
used in investing activities |
|
(14,811 |
) |
|
|
(6,541 |
) |
|
|
(20,960 |
) |
|
|
(41,696 |
) |
Financing Activities |
|
|
|
|
|
|
|
Proceeds
from issuance of preferred stock |
|
— |
|
|
|
60,000 |
|
|
|
— |
|
|
|
60,000 |
|
Proceeds
from exercise of unit options and stock options |
|
120 |
|
|
|
18 |
|
|
|
288 |
|
|
|
92 |
|
Payment
of deferred initial public offering costs |
|
(1,823 |
) |
|
|
— |
|
|
|
(2,128 |
) |
|
|
— |
|
Cash
paid for repurchase of preferred stock, common stock, and vested
options |
|
— |
|
|
|
(1,262 |
) |
|
|
— |
|
|
|
(1,262 |
) |
Net cash
(used in) provided by financing activities |
|
(1,703 |
) |
|
|
58,756 |
|
|
|
(1,840 |
) |
|
|
58,830 |
|
Impact
of foreign currency on cash, cash equivalents, and restricted
cash |
|
128 |
|
|
|
6 |
|
|
|
157 |
|
|
|
(26 |
) |
Net
(decrease) increase in cash, cash equivalents, and restricted
cash |
|
(7,934 |
) |
|
|
66,090 |
|
|
|
(4,101 |
) |
|
|
37,559 |
|
Cash,
cash equivalents, and restricted cash at beginning of period |
|
35,353 |
|
|
|
34,332 |
|
|
|
31,520 |
|
|
|
62,863 |
|
Cash,
cash equivalents, and restricted cash at end of period |
$ |
27,419 |
|
|
$ |
100,422 |
|
|
$ |
27,419 |
|
|
$ |
100,422 |
|
|
|
|
|
|
|
|
|
Unaudited Reconciliation of GAAP Operating Income to
Non-GAAP Operating Income and GAAP Operating Margin to Non-GAAP
Operating Margin(in thousands, except percentages)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
GAAP operating
income |
|
$ |
2,863 |
|
|
$ |
3,257 |
|
|
$ |
15,242 |
|
|
$ |
3,965 |
|
Stock-based
compensation expense |
|
|
74 |
|
|
|
88 |
|
|
|
224 |
|
|
|
236 |
|
Non-GAAP
operating income |
|
$ |
2,937 |
|
|
$ |
3,345 |
|
|
$ |
15,466 |
|
|
$ |
4,201 |
|
|
|
|
|
|
|
|
|
|
GAAP operating
margin |
|
|
3 |
% |
|
|
6 |
% |
|
|
7 |
% |
|
|
3 |
% |
Non-GAAP operating
margin |
|
|
4 |
% |
|
|
6 |
% |
|
|
7 |
% |
|
|
3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited
Reconciliation of GAAP Net Income to Non-GAAP Net
Income |
|
|
|
|
|
|
|
|
(in thousands, except
per share data) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
GAAP net income |
|
$ |
2,379 |
|
|
$ |
2,138 |
|
|
$ |
10,932 |
|
|
$ |
2,659 |
|
Stock-based
compensation expense, net of tax (1) |
|
|
48 |
|
|
|
57 |
|
|
|
146 |
|
|
|
153 |
|
Change
in tax provision from stock-based compensation expense(2) |
|
|
(267 |
) |
|
|
— |
|
|
|
(640 |
) |
|
|
— |
|
Non-GAAP
net income |
|
$ |
2,160 |
|
|
$ |
2,195 |
|
|
$ |
10,438 |
|
|
$ |
2,812 |
|
Non-GAAP
net income per share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.02 |
|
|
$ |
0.02 |
|
|
$ |
0.10 |
|
|
$ |
0.03 |
|
Diluted |
|
$ |
0.02 |
|
|
$ |
0.02 |
|
|
$ |
0.10 |
|
|
$ |
0.03 |
|
Weighted-average number of shares of common stock used in
computing net income per share to common stockholders: |
|
|
|
|
|
|
|
|
GAAP
Basic Shares |
|
|
42,262 |
|
|
|
44,692 |
|
|
|
42,169 |
|
|
|
44,665 |
|
Preferred Shares assuming conversion |
|
|
60,565 |
|
|
|
64,163 |
|
|
|
60,565 |
|
|
|
59,734 |
|
Total
Non-GAAP Basic Shares |
|
|
102,827 |
|
|
|
108,855 |
|
|
|
102,734 |
|
|
|
104,399 |
|
GAAP
Diluted Shares |
|
|
46,567 |
|
|
|
48,069 |
|
|
|
46,311 |
|
|
|
48,041 |
|
Preferred Shares assuming conversion |
|
|
60,565 |
|
|
|
64,163 |
|
|
|
60,565 |
|
|
|
59,734 |
|
Total
Non-GAAP Diluted Shares |
|
|
107,132 |
|
|
|
112,232 |
|
|
|
106,875 |
|
|
|
107,775 |
|
(1) The stock-based compensation amounts reflected in the
table above are tax effected at the U.S. federal statutory tax rate
of 35%. |
(2) This adjustment reflects the tax effect of differences
between tax deductions related to stock compensation and the
corresponding financial statement expense. CarGurus adopted ASU
2016-09 on January 1, 2017 which requires these differences to be
recorded through the income tax provision. Prior to January 1,
2017, these differences were recorded to additional
paid-in-capital. As a result, there is no adjustment for the three
or nine months ended September 30, 2016. |
|
Unaudited Reconciliation of GAAP Expense to Non-GAAP
Expense and GAAP Expense as a Percentage of Revenue to Non-GAAP
Expense as a Percentage of Revenue(in thousands, except
percentages)
|
|
|
Three Months Ended September
30, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
Cost of Revenue |
|
S&M |
|
P,T&D(1) |
|
G&A |
|
Cost of Revenue |
|
S&M |
|
P,T&D |
|
G&A |
GAAP expense |
|
$ |
4,720 |
|
|
$ |
63,891 |
|
|
$ |
5,796 |
|
|
$ |
5,006 |
|
|
$ |
2,852 |
|
|
$ |
40,510 |
|
|
$ |
2,984 |
|
|
$ |
3,101 |
|
Stock-based
compensation expense |
|
|
(6 |
) |
|
|
(35 |
) |
|
|
(24 |
) |
|
|
(9 |
) |
|
|
(6 |
) |
|
|
(43 |
) |
|
|
(28 |
) |
|
|
(11 |
) |
Non-GAAP expense |
|
$ |
4,714 |
|
|
$ |
63,856 |
|
|
$ |
5,772 |
|
|
$ |
4,997 |
|
|
$ |
2,846 |
|
|
$ |
40,467 |
|
|
$ |
2,956 |
|
|
$ |
3,090 |
|
GAAP expense as a
percentage of revenue |
|
|
6 |
% |
|
|
77 |
% |
|
|
7 |
% |
|
|
6 |
% |
|
|
5 |
% |
|
|
76 |
% |
|
|
6 |
% |
|
|
6 |
% |
Non-GAAP expense as a
percentage of revenue |
|
|
6 |
% |
|
|
77 |
% |
|
|
7 |
% |
|
|
6 |
% |
|
|
5 |
% |
|
|
76 |
% |
|
|
6 |
% |
|
|
6 |
% |
(1) Product,
Technology, & Development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September
30, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
Cost of Revenue |
|
S&M |
|
P,T&D(1) |
|
G&A |
|
Cost of Revenue |
|
S&M |
|
P,T&D |
|
G&A |
GAAP expense |
|
$ |
12,367 |
|
|
$ |
168,495 |
|
|
$ |
14,153 |
|
|
$ |
14,098 |
|
|
$ |
6,671 |
|
|
$ |
108,823 |
|
|
$ |
8,134 |
|
|
$ |
8,719 |
|
Stock-based
compensation expense |
|
|
(16 |
) |
|
|
(108 |
) |
|
|
(72 |
) |
|
|
(28 |
) |
|
|
(14 |
) |
|
|
(119 |
) |
|
|
(76 |
) |
|
|
(27 |
) |
Non-GAAP expense |
|
$ |
12,351 |
|
|
$ |
168,387 |
|
|
$ |
14,081 |
|
|
$ |
14,070 |
|
|
$ |
6,657 |
|
|
$ |
108,704 |
|
|
$ |
8,058 |
|
|
$ |
8,692 |
|
GAAP expense as a
percentage of revenue |
|
|
5 |
% |
|
|
74 |
% |
|
|
6 |
% |
|
|
6 |
% |
|
|
5 |
% |
|
|
79 |
% |
|
|
6 |
% |
|
|
6 |
% |
Non-GAAP expense as a
percentage of revenue |
|
|
5 |
% |
|
|
74 |
% |
|
|
6 |
% |
|
|
6 |
% |
|
|
5 |
% |
|
|
79 |
% |
|
|
6 |
% |
|
|
6 |
% |
(1) Product,
Technology, & Development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Reconciliation of GAAP Net Income to Adjusted
EBITDA(in thousands)
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
GAAP net income |
|
$ |
2,379 |
|
|
$ |
2,138 |
|
|
$ |
10,932 |
|
|
$ |
2,659 |
|
Depreciation and
amortization |
|
|
1,083 |
|
|
|
545 |
|
|
|
2,670 |
|
|
|
1,381 |
|
Stock-based
compensation expense |
|
|
74 |
|
|
|
88 |
|
|
|
224 |
|
|
|
236 |
|
Other (income),
net |
|
|
(106 |
) |
|
|
(107 |
) |
|
|
(323 |
) |
|
|
(260 |
) |
Provision for income
taxes |
|
|
590 |
|
|
|
1,226 |
|
|
|
4,633 |
|
|
|
1,566 |
|
Adjusted EBITDA |
|
$ |
4,020 |
|
|
$ |
3,890 |
|
|
$ |
18,136 |
|
|
$ |
5,582 |
|
|
|
|
|
|
|
|
|
|
Unaudited Reconciliation of GAAP Net
Cash and Cash Equivalents Provided by Operating Activities to
Non-GAAP Free Cash Flow(in thousands)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
GAAP net cash and cash
equivalents provided by operating activities |
|
$ |
8,452 |
|
|
$ |
13,869 |
|
|
$ |
18,542 |
|
|
$ |
20,451 |
|
Purchases of property
and equipment |
|
|
(2,271 |
) |
|
|
(2,327 |
) |
|
|
(4,247 |
) |
|
|
(4,009 |
) |
Capitalization of
website development costs |
|
|
(540 |
) |
|
|
(440 |
) |
|
|
(1,487 |
) |
|
|
(913 |
) |
Non-GAAP free cash
flow |
|
$ |
5,641 |
|
|
$ |
11,102 |
|
|
$ |
12,808 |
|
|
$ |
15,529 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures and Other Business
MetricsTo supplement our consolidated financial
statements, which are prepared and presented in accordance with
Generally Accepted Accounting Principles in the United States, or
GAAP, we provide investors with certain non-GAAP financial measures
and other business metrics, which we believe are helpful to our
investors. We use these non-GAAP financial measures and other
business metrics for financial and operational decision-making
purposes and as a means to evaluate period-to-period comparisons.
We believe that these non-GAAP financial measures and other
business metrics provide useful information about our operating
results, enhance the overall understanding of past financial
performance and future prospects and allow for greater transparency
with respect to metrics used by our management in its financial and
operational decision-making.
The presentation of non-GAAP financial information and other
business metrics is not meant to be considered in isolation or as a
substitute for the directly comparable financial measures prepared
in accordance with GAAP. While our non-GAAP financial
measures and other business metrics are an important tool for
financial and operational decision-making and for evaluating our
own operating results over different periods of time, we urge
investors to review the reconciliation of these financial measures
to the comparable GAAP financial measures included above, and not
to rely on any single financial measure to evaluate our
business.
We define Adjusted EBITDA as net income (loss), adjusted to
exclude: depreciation and amortization, stock-based compensation
expense, other expense (income), net, the (benefit from) provision
for income taxes, and other one-time, non-recurring items, when
applicable. We have presented Adjusted EBITDA because it is a key
measure used by our management and board of directors to understand
and evaluate our operating performance, generate future operating
plans, and make strategic decisions regarding the allocation of
capital. In particular, we believe that the exclusion of certain
items in calculating Adjusted EBITDA can produce a useful measure
for period-to-period comparisons of our business.
We define Free Cash Flow as cash flow from operations, adjusted
to include purchases of property and equipment and capitalization
of website development costs. We have presented Free Cash Flow
because it is a measure of the company’s financial performance that
represents the cash that the company is able to generate after
expenditures required to maintain or expand our asset base.
We also monitor operating measures of non-GAAP operating income
and non-GAAP operating margin, non-GAAP net income and non-GAAP net
income per share. These non-GAAP financial measures exclude
the effect of stock-based compensation expense. We believe
that these non-GAAP financial measures provide useful information
about our operating results, enhance the overall understanding of
past financial performance and future prospects and allow for
greater transparency with respect to metrics used by our management
in its financial and operational decision-making.
While a reconciliation of non-GAAP guidance measures to
corresponding GAAP measures is not available on a forward-looking
basis as a result of the uncertainty regarding, and the potential
variability of, many of these costs and expenses that we may incur
in the future, we have provided a reconciliation of non-GAAP
financial measures and other business metrics to the nearest
comparable GAAP measures in the accompanying financial statement
tables included in this press release.
We define paying dealers as the number of dealers subscribing to
one of our Enhanced or Featured Listing products at the end of a
defined period.
We define average annual revenue per subscribing dealer (AARSD),
as measured at the end of a defined period, as the total
marketplace subscription revenue during the trailing 12 months
divided by the average number of paying dealers during the same
trailing 12-month period.
We define a monthly unique user as an individual who has visited
our website within a calendar month, based on data as measured by
Google Analytics. We calculate average monthly unique users as the
sum of the monthly unique users in a given period, divided by the
number of months in that period. We count a unique user the first
time a computer or mobile device with a unique device identifier
accesses our website during a calendar month. If an individual
accesses our website using a different device within a given month,
the first access by each such device is counted as a separate
unique user.
We define monthly sessions as the number of distinct visits to
our website that take place each month within a given time frame,
as measured and defined by Google Analytics. We calculate average
monthly sessions as the sum of the monthly sessions in a given
period, divided by the number of months in that period. A session
is defined as beginning with the first page view from a device
and ending at the earliest of when a user closes their browser
window, after 30 minutes of inactivity, or at midnight Eastern Time
each night. A session can be made up of multiple page views
and visitor actions, such as performing a search, visiting vehicle
detail pages, and connecting with a dealer.
Investor Contact: Seth PotterICR, Inc., for
CarGurus, Inc.888-508-1190investors@cargurus.com
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