CarGurus, Inc.

Second quarter revenue increased 13% year over year to $251 million. Non-GAAP gross profit rose 12% year over year to $231 million, with non-GAAP gross margin of 92%, down about 90 basis points year over year. Non-GAAP adjusted EBITDA was $85 million, up 7% year over year, with a 34% margin, down about 200 basis points year over year. Non-GAAP EPS was $0.66, up 16% year over year, and free cash flow was $88 million, or 103% of adjusted EBITDA. On balance sheet, the company ended Q2 with $122 million in cash and cash equivalents, up $50 million from Q1, and had $46 million remaining on its 2026 buyback authorization. For Q3 2026, management guided to revenue of $253.5 million to $258.5 million, adjusted EBITDA of $82 million to $90 million, and non-GAAP EPS of $0.63 to $0.69. Full-year 2026 revenue is still expected to grow 10% to 13% year over year, while full-year non-GAAP adjusted EBITDA margins are now expected to compress approximately 50 to 150 basis points in 2026 relative to 2025.

Jason Trevisan said the quarter showed strong execution across the marketplace and the company’s newer AI-powered products. He emphasized that dealer caution around spending appears tied to temporary factors like margin pressure, fewer days on lot, and FTC-driven pricing transparency, but said those conditions improved somewhat during the first half. He also highlighted the company’s broader strategy: expand deeper into dealer workflows, build an AI-led consumer shopping experience, and deploy capital with discipline while continuing share repurchases.

Javier Zamora opened the call, but the financial commentary came from Jason Trevisan. He pointed to revenue of $251 million, gross profit of $231 million, adjusted EBITDA of $85 million, and free cash flow of $88 million, noting cash generation converted 103% of adjusted EBITDA. He said operating expenses were $154 million, up 16% year over year, largely because of higher sales and marketing spend and more investment in product, technology, and development. He also noted the company repurchased $29 million of shares in the quarter, had $46 million left on its authorization, and has repurchased about $925 million of stock since 2022.

Analysts focused on the macro backdrop, the pace and duration of dealer spending weakness, and whether AI search is improving conversion. Management said dealers are being more deliberate because of margin pressure, GPU pressure, and FTC-related transparency changes, but said those factors are temporary and improved somewhat over the first half. On AI, Trevisan said Guru is producing much richer shopper signals and better search experiences, while dealer customers using those signals are converting leads better; he also said AI is woven into core search rather than monetized as a separate product. Questions also probed Price Advantage’s customer mix and M&A priorities, with management saying adoption is broad-based and that acquisitions would likely be smaller dealer-side software or point-solution deals that help accelerate its four dealer pillars.