CarGurus, Inc. Q2 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2026. CarGurus, Inc. operates as a multinational automotive platform connecting consumers and dealers. Effective in the fourth quarter of 2025, the Company revised its segment reporting to a single reportable segment following the wind-down of its CarOffer business, which was classified as discontinued operations as of December 31, 2025.
Key Financial Metrics
| Metric | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 |
|---|---|---|---|---|
| Revenue | $250.97 million | $221.99 million | $494.53 million | $434.23 million |
| Gross Profit | $231.10 million | $206.32 million | $455.72 million | $404.21 million |
| Gross Margin | 92.1% | 92.9% | 92.1% | 93.1% |
| Net Income (Continuing Ops) | $49.19 million | $48.99 million | $81.42 million | $91.06 million |
| Diluted EPS (Continuing Ops) | $0.54 | $0.49 | $0.87 | $0.89 |
| Adjusted EBITDA (Continuing Ops) | $84.72 million | $79.36 million | $164.95 million | $148.07 million |
| Cash and Equivalents | $122.14 million | $190.52 million (Dec 31, 2025) | N/A | |
| Operating Cash Flow (YTD) | N/A | $164.44 million | $141.00 million |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 13% in Q2 2026 and 14% YTD compared to 2025, driven by growth in Quarterly Average Revenue per Subscribing Dealer (QARSD) and new dealer acquisitions.
- Impairment Charges: A significant non-cash impairment of $19.65 million was recorded YTD 2026 (vs. $0.5 million YTD 2025). This was primarily due to a $14.7 million impairment of the operating lease right-of-use asset and $4.5 million in leasehold improvements for the 121 First Street lease, which the Company intends to sublease.
- Operating Expenses: Sales and marketing expenses rose 18% in Q2 and 17% YTD, attributed to increased performance marketing spend and employee-related costs. Product, technology, and development expenses increased 13% in Q2 and 10% YTD.
- Share Repurchases: The Company repurchased 6.29 million shares for $204.2 million YTD 2026 under the 2026 Share Repurchase Program. As of June 30, 2026, $45.8 million remained available under this program.
- Discontinued Operations: No results from discontinued operations (CarOffer) were recorded in 2026, whereas Q2 and YTD 2025 included net losses of $26.6 million and $29.7 million, respectively.
Guidance, Outlook, and Risks
- Outlook: Management expects to continue funding operations and share repurchases through cash on hand and operating cash flows. The Company is evolving into a data- and intelligence-driven platform to support dealer workflows.
- Credit Facility Amendment: On August 6, 2026 (subsequent to the period end), the Company amended its Credit Agreement to reduce the revolving commitment from $400 million to $200 million and extend the maturity date to August 6, 2031.
- Risks: Key risks include macroeconomic conditions affecting vehicle sales, competition, inventory supply chain challenges, and the impact of privacy regulations (e.g., in the U.K.) on user tracking and measurement.
- Unusual Items: The $19.2 million increase in impairment expense YTD 2026 is a non-recurring item related to the 121 First Street lease impairment.
Investor Verification Checklist
- Lease Impairment Impact: Verify the long-term impact of the 121 First Street lease impairment and the success of the subleasing strategy on future operating expenses.
- QARSD Sustainability: Assess whether the growth in Quarterly Average Revenue per Subscribing Dealer is sustainable given the competitive landscape and dealer ROI expectations.
- Cash Flow vs. Repurchases: Monitor the balance between strong operating cash flow generation ($164.4 million YTD) and aggressive capital return via share repurchases ($202.1 million YTD).
- International Growth: Review the performance of International markets, which saw a decline in average monthly unique users and sessions compared to the prior year, potentially due to privacy law compliance changes.
- Debt Covenant Compliance: Confirm continued compliance with the amended Credit Agreement covenants, specifically the new Consolidated Total Gross Leverage Ratio cap of 6.25:1.00.