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SEC filingCarGurus Q2 2025 revenue grew 7% YoY to $234.0M, with U.S. Marketplace driving margin expansion, partially offset by Digital Wholesale decline and wind-down.
For the three months ended June 30, 2025, CarGurus generated total revenue of $234.0 million, a 7% increase compared to $218.7 million in the same period last year. Marketplace revenue, which accounted for 95% of total revenue, grew 14% to $222.0 million, driven by a 13% increase in U.S. Marketplace segment revenue. Wholesale and product revenue declined 52% and 45%, respectively, due to lower transaction volumes in the Digital Wholesale segment.
Gross profit increased 12% to $204.4 million, with gross margin expanding 390 basis points to 87.3% from 83.4%, reflecting the favorable mix shift toward higher-margin marketplace revenue. Operating income swung to a positive $24.8 million from a loss of $93.6 million, largely due to a $97.8 million reduction in impairment charges (from $127.5 million to $29.6 million). Net income was $22.3 million versus a net loss of $68.7 million in the prior year. Adjusted EBITDA, a non-GAAP measure, rose 39% to $77.3 million from $55.6 million, representing a 33.0% margin.
U.S. Marketplace revenue increased 13% YoY to $202.7 million, representing 87% of total revenue. Segment income from operations grew 40% to $58.8 million, with operating margin improving to 29.0% from 23.0%. The growth was attributed to higher paying dealer count (up 4.2% sequentially) and a 9% increase in quarterly average revenue per subscribing dealer (QARSD) to $7,533. Management cited wallet share gains from upgrades and add-on product adoption.
Digital Wholesale revenue fell 49% to $12.0 million (5% of total), as transactions dropped 55% to 3,955. Segment operating loss narrowed 73% to $37.0 million, driven by a $103.6 million reduction in operating expenses (including lower impairments). However, segment loss as a percentage of revenue remained deeply negative at -308%. On August 6, 2025, the board approved winding down CarOffer, including Dealer-to-Dealer and IMCO products, citing a volatile pricing environment. Total wind-down costs are estimated between $14 million and $19 million, mostly in H2 2025.
Other revenue (Autolist, PistonHeads) grew 28% to $19.3 million, with operating income of $3.1 million (16% margin), relatively stable.
Management expects to substantially complete the CarOffer wind-down in the second half of 2025, with total cash expenditures of $14-19 million. Thereafter, the company will focus on AI-powered inventory intelligence and consumer vehicle sourcing through Top Dealer Offers, rather than transaction facilitation. The U.S. Marketplace segment is expected to continue benefiting from dealer subscription growth and pricing initiatives, though no specific revenue or earnings guidance was provided. The company also disclosed a $150 million increase to its share repurchase program (total authorization now $350 million, extended to July 2026), signaling confidence in cash generation. Macroeconomic factors such as tariffs, interest rates, and consumer spending remain watchpoints for future performance.