CarGurus (CARG) 7 Nov 232023 Q3 Earnings call transcript

Greetings. Welcome to CarGurus Third Quarter 2023 Conference Results. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Kirndeep Singh, Vice President, Investor Relations. Thank you.

begin. may You

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

we risks in reflected making required to our those obligation the and risks our filings, law. those the by materially such which our the and our and could Investor which of cause as no on results concerning website forward-looking uncertainties, are undertake update on to from found to or call, During SEC expectations are website. and uncertainties is subject statements, statements. We section Relations revise Information discussed can forward-looking based SEC's actual differ current in except be in beliefs. will be statements, These statements which

metrics We operational operating by past GAAP certain investor future is and Investor provide refer measures. today Further, can financial A today, these that information about section we release used updated our press as during allow will as for found on of be comparable understanding which financial Relations useful our and prospects management call its decision-making. issued it well the in our non-GAAP website. financial course in our non-GAAP to financial as our to results, our of relates overall believe to presentation, the and in enhance non-GAAP measures of of performance transparency greater reconciliation the included measures

to call Jason. With that, I'll the over now turn

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

in news equity like have to I of the we Before that interest the accelerated remaining I share the purchase would exciting minority CarOffer. begin,

for sooner Further, the integrated opportunities allow platform and sooner. decision purchase believe a our improvements to even will transaction-enabled our decision new us consumer an continue our to our by accelerate accelerating create driven operational we aims product build momentum desire the platform our help purchase, us platform that build that We even end-to-end and this dealer to experience. of was of to stronger to dealer better by partners. an strong synergies realize expedite Our

to X thank partnership Zach the Hallowell Upon in CarOffer, connection Bruce's I of December, the lead for forward. of in would his Thompson, business for Bruce the CEO CarOffer years. like with going expected closing nearly acquisition will resignation

We this their are OPENLANE Manheim and so roles exciting for from during at industry and excited his incredible phase. expertise Auctions team next his and CarOffer lead to prior Zach leverage relationships to

results. Now our turning quarter to third

This quarter, we we On our thrilled further our landscape. global this achieved significant quarter, platform. scale, strength automotive of are and face milestones markets, in and opportunity in especially that success the accomplishment global U.K. business a a the achieved we validates profitability our believe and a of noteworthy that macroeconomic transaction-enabled that underscore progress challenging

finally, the And product we year-over-year to business of head innovation. U.S., resilient through next iteration listings which to our their Instant the either continued high-margin XXXX offer, highest In My dealership. and to top we packaging the sell car referred consumers growth or into local pricing, revenue online gives dealer offer, Sell of as Max Cash we choice Car entirely the introduced bidding acceleration as

set I'm an will consolidated the forecasted quarter sequentially. stronger, pleased believe more EBITDA fourth quarter be for exceeding this adjusted extremely our our we that us in even what resulted achievements profitable stage and guidance

is margins, our little plan. we Our produce as Notably, business which are exceeded U.K. was performance a improving our now driven profitability operating after Listings year-over-year well. quarter our pleased Canada reached year to a by and over profitable business, this continues EBITDA

and to both position international greater ourselves these marketing consumer The a customers player efficiencies as to ability the dealer our demonstrates path value business key drive for and markets. to and in profitability our

While we future business to the grow areas in invest exceeded prudently. we the want thoughtful our plan, in remain to where we operating U.K.

Growth In quarterly average the adding dealers quantity and renewals, per and enhance existing continue in innovation at U.S., to rates QARSD, listing wallet expansion higher revenue expansion. we dealer, lead subscribing market long-term our is or QARSD will of and and higher we from in to comes believe quality. adoption, value dealer dealers, product reflected through share customer lead new upgrades, which deliver retention and more

of QARSD QX with ABRs, or lever delivered One reviews, recent business the which consistent results annual quarter. is in growth prior our

win who our robust We continue renewals churned to back those see the a of and for in quarter. accepting motion had dealers a rate percentage strong prior

also have full contracts. XX% we product remaining represent expect rates quarter, to In seen the adoption we of and which in annual our the the year. fourth planned attach our higher ABRs, nearly will, for healthy finish of Furthermore, dealer total, base XX% of

value As continuing our we remain our dealer more closely renewal other the partners with will just with with QARSD fueled look ahead realize partnership to underpriced, our customers. which dealers materially while believe levers next continual all the steady collaborative, we will and align mentioned, year, Future via I be deeper ABRs provide. will renewals, that we growth we process by continue account to for management

a to with Plus, the from new of and in An features increased bundling Feature and volume to of higher we Priority packages launched that Deal example incentive combining The up lead in packaging listing placements premium was leads benefits listing more complementary that initiatives Deal products are our a quality Digital tiers, listing premium packaging Feature higher provide make Plus likely of close. and Xx with October including foundation suite of upgrades that Digital valuable. increasingly are dealers

also dealers Digital eager the preferences. who for to transaction toward of like more Bundling online, empowered evolution XX% sales the consumers are the Deal to expedites consumer digitally with products of align complete allowing

least In Deal the Insights increase Another that we to is thresholds inventory specific to the inform new reduction initiative, will price and needed help and we CarGurus. automated changes times. specify October, valuable provides of best and receive recently next Next will paid their packages amount data dealers turn an feature deal their bring Best insights to for designed on first added of rating that margin. on price achieve tool the dealer weekly price optimize our that the report our launched Dealers can to blueprint insights dealers volume reduction Rating

result value foster As insights. deeper we solutions other data ability with strategic toward business platform, comprehensive we will that believe and number bundle across growing our curate enhance this partnerships progress to an ROI, of end-to-end the and insights, the overall customers. stickier have transaction-enabled a unique the dealer increase will provide in We products

ongoing innovation adoption. product and that avenue is Another QARSD drives

initially products and revenue yield with QARSD limited adoption and they impact, by the deal. potential new have evidenced may to digital experience Although as our have significant success

introduced to Sell we existing subscription offers: functionality Dealer My My dealers' product recently greater Instant online A we more X evolved which offer. As provide Sell a X successful running in top presents Max types new by known consumers Cash optionality Sell offer Car now My offer, CarOffer's of such, Car our and Car program as powered includes value. glove consumers After cities, highest X the with comfort early a offer Matrix their top white consumers Top vehicle. new and business. consumer's their and of trade-in Dealers pickup options, between the offer, service leverage valuable a to is choice leads Consumers and take the which dealer from which CarGurus dealership for home; can now the generate to CarOffer from make providing and technology a instantly local vehicles choose more tailored can selection. on selling consumer offers convenience access the

reporting metro product areas in top XX proposition unique Car launched population. offer to Promoter Net U.S. XX, the value of covering new dealers of offer recently are dealer exemplifying we My access can innovation. our Scores with Sell XX% than more dealers the Early

dealers driver Finally, rates for more paying remains are who of QARSD. key new market addition the the

quarter, in QARSD since in momentum platform. quarter sequentially U.S. paying acquisition grew all growing from U.S. This the Growth sales levers particular, X% third was XX,XXX our signings quarter, on in customer XXXX. strong and largest churn, through MRR in dealer new resulted and In our year-over-year. XXX we dealers QX dealer resulting QARSD $X,XXX, came moderating our by base

year-over-year, All in productivity are to growing to growing of business response are been team revenue year-over-year. and In growth. Appropriately, year, X.X% drivers. combined previously we've the revenue factors grown marketplace growth these QX this accelerate increased we've grew demand our sales we our QX, through our we experiencing. and In this Marketplace the growth X.X% year-over-year accelerating our quarter, expect mentioned

to are and has overcome industry our dealer been anything automotive innovate these but partners. the continue to by While ability these obstacles, years, for X team's our past value drive normal excited we

and content consumer search, technology innovation, With approach investment machine store, and roots learning our data-centric artificial management, and our in grown support. have we creation to in like areas intelligence account company's

piloted ongoing is to search to for and to Our which language the in Car Find their listings, consumers, using shoppers efforts the being matching we to vehicles relevant for them preferences functionality, Moreover, shop the Canada. allows by This original My they teams in experience our easily automatically of our compare vehicle consumers, vehicles vehicle shopping conversational allowing simplifies U.K. from are enhance as side leveraging comparisons. to approach content comprehensive process generate purchasing editorial online. for specifications X the side now

toward move dealers equipping and tools to so. necessary increasingly them we with consumers an As environment, digital-first alike are do

unable our who consumer platform our to may the of a dealer these wish to leverage breadth creating simultaneously consumer are our independently for while or journey for field tailors who customers, shopping the leveling We be solutions that develop playing partners audience. the

online providing Digital and transforms or journey purchase a functionalities or car insurance seamless in harnessing includes for products, dealer the the and advanced facilitating buying trade to financing placing of to in estimates, finance deal options, experience that stepping a vehicle-specific a transaction. offering pull an in-store This online scheduling prequalification is deposit by hard our appointment. stone deliver consumers

year-over-year. Digital quarter over We the XXX% growth Deal with X,XXX representing dealers, ended

This Deal leads. Deal their Deal leads them total more We October. e-mail likely have for leads move up of ROI Digital average, as our dealers affording tiers Xx enables by a leads featured that visibility total with to high-intent, percentage of Overall, on now to quality XX% the continue close. Top-performing Digital Digital higher launched strategic enhance as greater shoppers in listings to are grow. new receive ready-to-purchase to from users, us of

As to we our inventory sell are journey out more building partners, end-to-end we do the of more approximately so can Retail to an consumers efficiently continue capabilities preowned for creating who Digital home. their our dealer from XX% on want that dealers offering our of

empower to experience every on Deal the greater of enables an to dealers consumers through consumers Digital in-store will with to online journey. of While step future service Digital the car-buying offer online fully partners Retail our dealer CarGurus, optionality

online an in asset-light test capabilities dealer-friendly we model. a of purchases such, delivery to with out-of-market and facilitate to subset small are As dealers customers using working

limited evolving warranty delivery, post-sale comes In ensure with compete to of our sell addition consumers. X-day to ultimate and a empower policy all CG a worry-free to dealers a cars, which consumer both dealers The while digital-first guarantee, is pilot meeting environment. a and for more to in a Retail demand return experience goal and Digital offers

primary to network to return In operational of our positive wholesale confidence. rebuild Digital trajectory to of to focus favorable the even profitability been enhancements aim also Wholesale, engage less in with sustaining face our we continuing environments. growth has dealer as We're the and our

is initial the establishing the matrix on progress trust steps direction. and to significant customer team we've enhancements focus a designed in and in made dedicated innovation and foster represent retention right Our operational confidence, greater

and now an to efficient source new effective matrix to players to XX-hour a purchases like utilizing buying during in volatile environment. our sell We continue drive have comfort large to and in dealers and pricing way it And find programmatic certainty and increase approval that tooling greater an seen buy inventory. are be their

of resulted merchandise quarter gross quarter-over-quarter. our de-fleet back who the million in customers from selling of the sales, GMS, ended transactions For decrease to with on fleet XX,XXX down example, We The approximately have quarter. or $XXX seasonally the the transactions, rental third pivoted in year platform. XX% in

and our the regain there's as work automotive innovate the uniqueness to the done the demonstrate normalizes. well to be and provide Car continue market with offer leverage with share positioned While interim, market we with grow to we partners, Sell are dealer offerings our that top CarGurus. dealer to In platform coming dealers to more technology matrix to believe My together CarOffer we of

buy as dealers toward end-to-end our empower confidently consumers quarter the meaningful with listings as a platform are proud finance, with vehicle they and provides and transaction-enabled business We and choice accelerating need transparency innovative reflect that trust, results progress this vehicles. to that sell an to shop, market source, tools an sell well and

digital dealer top and and our As business. we line in of new continue transactions, and time, their we fueling more build goals consumer to while at capabilities, customers same our are profitability growth products achieve helping the

we trajectory accomplishments consumer service of innovation set excited growth largest this ongoing by and And for our audience. us to XXXX all an of and have dealer are year, up with our platform. exciting the We best partners our believe,

Before overview of beginning fourth the third XXXX, for I guidance welcome performance CFO to full as provide in a our year our I Palazzo would by detailed December. like new quarter quarter followed formally our and Elisa

the thrilled And Elisa's her are join marketplaces and to CarGurus as will valuable and expertise to have expand be team. We background in we extraordinarily now business. our online us grow

Total quarter the down million, $XXX.X third year results. was our to XX% revenue turning period. from Now ago

the X% from up $XXX quarter. the year Marketplace third revenue X% quarter revenue million at was million. $XXX.X the prior for million guidance third approximately million in quarter, of in the Our $XXX total up end $XXX.X range for high was from of and the the prior

provided to XXXX periods growth dealers, first the the the represents highest we fourth pandemic-related comparisons of sequential growth this year-over-year highest concessions rate and XXXX. to quarter where Excluding rate quarter since the of since

marketplace driven our by The a as revenue result the prior of MRR Sequential business. acquisition of compared higher was primarily due increase QARSD to year-over-year strong revenue year growth. and listings growth to was X% stabilization OEM advertising in

a Wholesale of down in $XX the from improvement, prior wholesale quarter year-over-year conditions. in decrease we rental million was revenue XXXX, dealer-to-dealer in The decrease XX% $XX.X the quarter. uncertainty, in down operational million seasonality our coupled with dealers year market to Quarter-over-quarter, of with as third and XX% transaction saw due million prior retail fleet. continued price favorable $XX in was from typical the revenue retail experienced sales less prioritization and coupled for

was was for and Offer. from most million Instant The to million the year our revenue quarter. due revenue recent in $XXX.X from in year-over-year product in was decline prior down range. Lastly, Product down Cash for decision guidance line to our XX% midpoint third quarter, prior of $XX.X the million transactions the primarily $XX.X Max the XX% limit with

was and addition, rate enhanced product in by continued revenue our driven the consequently, policies. ASPs Instant inspection to lower capabilities Cash Max and $XX.X on revenue In due quarter Quarter-over-quarter, Offer meaningfully third arbitration platform. our low revenue. to arbitration transactions lower lower arbitration and generated have million fewer

a non-GAAP discuss expenses and now our profitability will I on basis.

change year gross compared high-margin due gross in non-GAAP primarily the was the margin non-GAAP year-over-year to our margin in quarter Third XX% shift to was XX% revenue ago The to quarter. in mix marketplace business.

Non-GAAP non-GAAP for to down quarter million. down to and Instant Offer. were expenses The was compared Total prior third to operating marketing X% expense year year-over-year investment our in continue the marketing year-over-year to expense $XXX.X million. reflected decision Max decrease XX% marketing sales Cash $XX limiting

represented XX% XX% the up from sales Non-GAAP marketing expense in of and ago of year period. revenue, revenue

to from year the primarily ago increase due an a technology year though employee-related relatively product, hiring previous it non-GAAP slowed increase was versus quarter we flat $XX.X period, an to salaries X% headcount quarter. of the sequentially and ago third the Similar as result million. our XX% quarters, third expenses in the of pace Our period and as increase in was development grew to in costs

product as our offerings end-to-end result of percentage headcount years of our remain we this our revenue a transaction-enabled grow to prior growth, develop to expanded expense As platform. to relative and elevated continue a as we build expect prior to

of $XX.X the the $X.X business. the our million million in to This recent end of Consolidated due our adjusted primarily high EBITDA above was listings range. of guidance quarter was most third overperformance

previously FX management business prudent favorable and quarter, mentioned, rates. growth, by U.K. our this profitability driven we expense As reached revenue

the was most end $X.XX for share Non-GAAP above high $X.XX our quarter, guidance third of the per attributable diluted common recent to range. shareholders earnings

quarter XX% driven third On stock-based by basis, to The total a XX% the incurred year in gross operating we we GAAP million, higher the ago of of expenses primarily was generated third year-over-year margin XX% year-over-year. $XXX.X In compensation. compared up increase quarter, period.

had In awards. XXXX, of result incentive favorable a relating adjustments of from unit we revaluation expense unit compensation and negative as QX the subject stock-based CarOffer

to million. Third decreased quarter $XX.X operating year-over-year income XX% GAAP

Net $XX.X income common net million. quarter consolidated GAAP $XX.X $XX net million, was third attributable attributable quarter income CarGurus to Third GAAP to and million. was income totaled shareholders

expenditure includes third quarter. quarter development of capital of a $X.X the and generated million. million flow, decrease cash $XX.X million We from of cash with million costs the equivalents, operations quarter We capitalized the end ended non-GAAP million $XXX.X in from $X.X cash third and second the in cash which and $XX.X in free website of

working our our provided Cash in a decrease was accounts. by by $X.X partly the offset primarily operations in capital by quarter driven third million results

quarter, aggregate of we third an for price XXX,XXX million. the repurchased During $XX.X shares purchase

XX, million September repurchased available had approximately in shares remaining of share $XXX.X we $XXX.X of a repurchases. had million As total for and

$XXX to I'm underscoring that share another to authorized commencing XXXX, to strategically in repurchase shareholders. program value has Board our Additionally, share pleased commitment million our returning

for I'll our close with quarter XXXX. fourth my full and prepared year remarks the outlook

$XXX We in quarter of to million. revenue the $XXX range million expect $XXX million to expect million, of to we revenue range to the be in year $XXX full be and our fourth

the fourth the revenue we expect high in year-over-year as we third saw quarter, In single-digit similarly growth quarter. marketplace

to as cautious, revenue Digital dealers we typical Wholesale coupled with seasonality. fourth with in quarter results line remain our In the quarter be expect third in business,

product million. the year $XXX forecast of Instant line million to to revenue our anticipate and revenue to in we expect profit Max dealers provides and dollars $XXX $XX for the it We fourth full launch $XX are subscription million to of a Max of gross Cash gross item be top the relative nature We offer, of range for given excited yield consumers range to the in offering product quarter about Offer. to experience the better we be cannibalize we dealer and which Accordingly, revenue. believe million, high-margin Infant

modest as in a growth, spend expect decrease still expect lower operating we full Marketplace expenses With accelerating year year-over-year and Marketplace expect XXXX below sequentially. improve be marketing We XXXX. revenue sequential we to to expenses operating EBITDA

We Wholesale conditions up. remain until expect pick customer Digital to activity and unprofitable buying market

of the fourth $X.XX in range adjusted non-GAAP our share to in quarter $XX and range $XX $X.XX. consolidated to million, the expect be of per We earnings to EBITDA non-GAAP million

vision adjusted year have $X.XX. Year-to-date, the million in EBITDA We in per share $XXX non-GAAP consolidated the $X.XX million, our Retail XXXX offer, be automotive full $XXX My toward range to made of and launch range substantial business. Digital innovation in to continued Card only we end-to-end growth expect to and being non-GAAP earnings the of we platform, Sell our progress accelerated of as top-dealer transaction-enabled in Marketplace

The and progress in dedication that, not have globally, for forward sets made, who extraordinary vision possible ultimate an a which the up making would unwavering exciting our reality. With up open I'll be to we us for push of commitment our the us without XXXX Q&A. employees continue call

Instructions] from Gupta [Operator is first with question Our JPMorgan. Rajat

a couple. had Great. I just

Firstly, the that But it I of fourth sequential if million of the quarter your well. implies the it comments of But $X kind flattish kind on remarks maybe confirmed Marketplace the guidance, increase kind that higher. it sequentially. implies business, prepared would as suggest hear in EBITDA EBITDA, is like around flattish CarOffer

because like is Or seasonality? focus with continue improvement. the I operational expected just So would that have would

I can have And maybe just clarify So you then if follow-up. a that?

Sure. Thanks, Rajat.

say higher. I I EBITDA there we the expected comments sequential also it's remarks, think ballpark that to is be be fair in on think the that CarOffer marketplace OpEx, you're our talked the But given about the growth should So in to flattish. and yes, in

a purchase remaining earlier. it. to little a And you that the surprising Got obviously, on CarOffer little decided stake buy Understood. the just decision,

business that led like you mentioned You But around condition there lead anything sooner in around the turning or also was efforts to the visibility the term I'm like any integration near increasing to broader on profitability that curious, of some market to the act that decision. purchase?

that wouldn't Sure. say act us to market the led I broader sooner.

have that In that better at much the our we've business, all think of harder gotten it it's and know, challenges forecast and forecasting terms subscription business, it's we've -- have so than a made predicting operational of but we we to we visibility, and I about. it talked transaction because as

to long-term operational experience the X Two, innovation reaffirms And control say Three, of that full these improvement. vision it more platforms our bear accelerated have we are: about ball the have having on it. Zach's it's then this one, of of would product I brought to accelerant reasons for ownership, to But excited X four, platforms. between on allows an together. our industry sort it we're conviction our us

Nick next is Our question Jones from Securities. with JMP

sticking I year this on we And guess, CarOffer. change the fully how out ultimately, the maybe look it and cycle kind -- the as change I does of on margins acquiring meaningfully investment next platform? beyond. of guess kind maybe further into Does

does It perspective the not Jason. thesis. change on investment Nick, our

heard and the expand to product continue the We -- up as resilient be in to talk quarters, portfolio couple in markets. us more down you've about last of

as in so continue. remain technology. and in investing same no, I margin and investing in future stability growth the well. of we're those the that And service. in targets, We're client And think terms We're the company, investing the certainly will of long-term

finding Great. coming easier? last sounds And back. It all, you're you quite on Are And the it from if Maybe no for come increased changing, to they is then faster? dealers and and just quarter? price maybe come finding at people back. a be one to getting back dynamic the say they that are ABR. dealers How to few like maybe you

things -- X much change. so The Sure. not

since Our because being QX similarly has our And there's had the return When did. our about in XX%, we then in of results QX talked increased return our rates QX around rates cohort as similar under another that as were strong. QX QX quarter cohort cohort belt.

is question Tom White Our with next Davidson. D.A. from

Two, could. if I

encouraging, say. is it Just the reviews, U.S. I'd dealer of kind growth, account despite which quarter-over-quarter increased

curious driven? guys up? of then growth dealer year the for follow-up. a sitting you next sector build growth got a And be to to going quick lots marketplace presumably is U.S. continue as inventory person could Or growth meaningful in mostly kind I still dealer Just U.S. whether on be

No, not it.

take a... You want to

Thanks It Thanks. thanks. point. here. It's big terrific in higher acquisition. the new a at That's for customers bringing our question. a part Tom, a Sam quarter Sure. was in. #X. Zales customer of QARSD for We're jump I'll price

best And platform the market much aggressive that the funnel this Let X consumer conservative are driving I'm I of with want market the drives more demand. rates. in high do I largest tough only There's largest me win? what get marketplaces. audience types is I who you're go seeing saying, down with, from to on a dealer to the customers. interest are largest customers. I of the one How of as marketplace. those audience and be quality think Those of perspective, the would going not that's the saying, down and in play again, the marketplace funnel in

customer, revenue, monthly We MRR we've since seen had our XXXX. biggest numbers customer acquisition recurring

So saying price in double-digit the and coming involuntarily the think reviews, in you customer to customers the in quarter at us kick number they're point quarter. half business coming from first despite, of won't do working in said, back, than then effectively. pay which after a some the rewinning two fair very our them back as on market market Jason side, plus in price annual we're price, to no and our acquisition own stratosphere out last the said, puts who ABRs, more the coming as winning And significant increases; is we're which I is

That range. XXX number is the in

of our choose the current back I But a win with and point to our is it's the winning customers think new quality ABRs price good the customers and expansion growing MRR customers new keep customer then those number keep -- plan who So our new don't acquired. business. and for net

our team I think it. at we doesn't incredible the just to a growing reaccelerating going we're and finding that's our way to company and So happen continue of We go business. lever as think business do continue forward. sales our service that's It and a size, that a growth is that reaccelerating

Great. are of dealerships the levels you like latest share early the in on the what platform. look season? to like engagement returning platform are of And companies a to travel And more buyers, next local fleet quick maybe could touched they just than -- to kind I'm car just transact? on of you thinking the maybe engagement your run-up quickly rental year their CarOffer on follow-up. might the kind peak Jason,

Of course.

about trends, seasonal dealers. So tethered of but I than experience. They type really is dealers a also than think would travel to it's clearly faster -- returning more business that are them well, different wouldn't much as be to tends running

on be platform defleet And year, some times recently, they always on as they past to there been they've our buyers, have our platform. will form. time so they and as ties more more it especially in often where in but And are heavy certain the seasons of been this active sellers

QX, we of programmatic the We that believe guidance given in or buying programmatic, do continue and directional what we selling. indications ease have not as QX, they'll quarters, the to future but think to value and know they really

that. compelling a platform for we're so And

over can disrupt a them work platform. in of our the we learned platform We also way of years, past on any the stability doesn't couple the of have have, how that

is Khan question with Our Naved from next Riley. B.

but from into questions curve will the for you the we'll opportunities me. continue scope at Jason, that? give be sense of next look us below year, rate A mentioned ABR the significantly couple with where done this of be is? Can still you some to paying What that percentage of year. dealers of had might

at rate or margin, terms anything just scale else sequentially? did arbitration up that going I down in change down follow-up look had been being Or wholesale Is of in the it gross the anything And If of that then line? because on I question. sequentially. was a

first to handle second or take you one the Sam, can -- I the to Sure. ahead, first question the question want and if Sam, you go why don't on then, ABRs. speak

year-over-year that successfully take reminding to QARSD Naved, just thrilled you jump I one quarter-over-quarter it want Happy so with, number, has if year-over-year, we're like. from which thanks grown that to for doesn't and Okay. asking. X% our but in at later, keep ABRs. and come the

We're I'll at new a customers premium upselling because price growing bringing QARSD products a I question about to packages, growing we've is Sell going just My and it's point. that because tremendous to of remind new take programs offer. dealer customers a we're XX% one. our year. like that We're want It's higher top we're packages. on good ABR to cross-selling revenue. On your renew said keep opportunity Car new specifically, to subscription this base this our higher

quarter now. customers last away will. priced Those the were market that the point you is the right lowest rate, customers. largest were from happening if They So price

tell, for of after below the we've rate slightly each set us. next customers can points, you market As quarter, We're that the success. seeing gone price still

renewing say the said, to no, point, and again. if for time them price a back on just of coming short agreeing Jason period As they

ABR Our be there to as renew that that QARSD could an for our lead growth. producing we There our will thought on next to year, volume be our continues more able we will be customers. components an By will to annual keep customers is ROI always grow, basis.

percentage we're tell higher acquiring the growth. part winning portion will know The go rates. that keep what more that We'll We just continue new question our component to of acquiring QARSD customers we're one we're ABR can't of business only and we QARSD you going as came that's after be. as that to at that So is, growth. though, beauty up,

keep adding packages. to We're to going premium our

going to higher a QARSD That's as up move package. forward. to tremendous a our to now Digital featured in platform, go premium Deal be customers So we lift

growing top way Sell an as My QARSD. obviously, products sell keep then we like to is Car offer, this additional dealer And additional new

So just I question very but many that excited to hope it's about business. that our the those for levers QARSD grows answers ABR, that. we're of one it, continuing

determined on top Sam, Sell Or still or pricing on that My the offer, what's the you're that that? you dealer is testing? something Car the that? Have subscription

publicly, But had that think as this price XX don't we've yet. still of about product be and it a we -- take we're and It's great at out not mode. We're from similar launched out pricing call market the points Naved. marketplace. country, others to what a to rates. in the out perspective. the in great the fully quarter pilot at we're regions Yes. fourth it we've are would It's question, announced looked a great product, a upon there I What's the in that been that

think program, consumers from glove in number I and want like the my you home. the very what vehicle white Sell is. it marketplace. up experience one, think what top choose about offer IMCO is, I can something the the dealer My They say, allows different to Pick the Car

payment me away from and me. can drive it get a digital Let you

is there now Dealers consumers to But get offer, which dealership factor, you and getting same at there? point. a While this got us local product. that drop second higher convenience like isn't price point the a you are price build a off Would a higher your choice. requested to

could there said, We're with like something that dealer in largest are build this. tool out the sets satisfied the you not Our marketplace.

great You growth NPS we're be on investment, XX We're it's a in on QARSD right heard about only the subscription score far. business lever now. we long-term from customers that our our significantly to markets a They're return scale will and getting as it thus getting adding it. for and

And arbitration. your around then on wholesale second and question

lowest, than the They're down they been been have trending So year. have since prices are of wholesale this month this spring I past 'XX. think, the unit --

continue over to aggregate So then. decline we it of the in next has next And end it the until since year. steady balance to probably a -- expect been -- decline to the

a as is result, rate, down. Conversion

being occur that bit transactions tends down, because it's actually were in -- our equal, but of that up X wholesale And the increases. but strike, a number to UAW attempted else factors the be versus point also tends down. and be those would to, to is and -- -- arbitration recently those little So all of

us registration matrix, and heard to that cars arbitration. the talk CarOffer we've more discrete to ability improvements product things customer way times, a ability machinations and And different see faster to about, integrity, at our arbitration delivery those low. limiting nicely have product-related helped really textile operational are really matrix, the we've a nice like I inspection, off that you've as have in keep all go a levels transaction really, processing. into transparency of that built are But mean satisfaction things our made

is Madhukar next question with from Kunal Our UBS.

that the One thought A is to work couple, matrix, and what consumer. dealer How dealers be could. the does if shown prices My sense? would offer. the I the in that Sell technically in Car I that would on the top enter

it in second if How long So where that is, also take? does And into play? does instant? come that that offer the does Is how work?

the And picking the QARSD. then car? be the then of offers the And is one the delta something is on X on cost would between up this really else? Or the it one, second

As we look at the QARSD evolvement of of next of year, into how should the we think -- or 'XX? growth

the I'll we I in back the about start offer. Car are Zales. heard It's Kunal, My dealer that to question, and with but top thanks. part a really excited of second come I'll minute because not it, I'm Sell sure Sam

It the up that's up it vehicle picked and off. consumer is an the is asked reason experience IMCO, be that different is You dropped the at to is. them. is, is for instant a up offer X They're it for matrix And setting which going offers. a an offer. then dealer setting That's

win might is, consumer that another chance to want second a buy have The I who to vehicle.

that that they're directly which opportunity, have a at why an dealer. opportunity to the came exactly So making they is and products opportunity is to with consumer. consumer buy-sell pay some the therefore, buy-seller more for much it gives for us to consumer offer transacts dropping for want and an use into the said, us. a This them and I more dealership to lucrative other compete the will, that that I marketplace. in comes dealership for I

drop-off cannibalized a IMCO launched. where IMCO. right be the about we choosing is now. it has are offer they're Not presented Sell been That's Car than delta. dealer why top guided to a asked delta that's by only you a My delta a meaningful So will bit at greater taking the this It consumers product being and it's extent terrific

competitors is the delta the is significant two versus Number marketplace. our in

this to early My significantly. today and Point are in can we're had win competing local we've for of a to consumers for consumers So business winning And success dealers Carvana, drop-off When Sell great Car. stage sell dealers this Solutions. CarMax, at dealership in the scenario,

the part the do was Jason, -- for wait question that sorry, of one? -- second I'd you take want to

can so related I next a topic. year, it. it's to Yes, It's take QARSD different

drivers given just growth the is factor run guidance have of I'll dealer other QARSD. but but factor. we what through QARSD and the is QARSD And So for year. are -- next one The quickly not

rewinning So significant at the on market those new for versus rates bringing customers who legacy and time driver we're at -- we're were is customers on lower a that first that rates.

Upgrading the ABRs overplayed one that renew are to new all us the renewing most packages -- get But customers. we renewing they We many we is because I think customers. about a ways sort of there and driver. bit are manifestation of time. of resigning a have ABRs, are that And talk are key And those extreme probably they're customers underpriced. and

products. Other

new adding are expansion, a Deal. So of highlight, in like we geo -- and car portfolio geographic products Digital broader other building highlight,

Now you've top about heard talk offer. dealer us

number So products. other there's of a

then -- And us dealer also about data we insights. you heard talk

the are have we us. them. that success to carte but we we'll meaningful confident more and these don't what are that so features charge even helping realize ways, getting value add And la think we're then value And for, dealers driving are in successfully dealers features we that they're we our a do that if from enough

is Arthur Our Doug with next from Partners. Huber question Research

market product business? think set you're I going next -- the the I looking jump balance pretty start business, predicting circumstances guess, is in circumstances is what to Jason, year, at is through to what of of likely the wholesale mean, of of rational, this side price which if the I decline set

on pivot My to cannibalization original And this proposition? look just from IMCO at then issue. beginning of sort Car away to ways Sell Are the you a follow-up

Sure. Thanks, Doug.

We if I continue penetration the yes, mean, the decline, is say wholesale -- wholesale which small. to would that's So digital there's I prices quite general in consensus view. think -- still

more than much have opportunity it for that we And is. an so we know digital share to take

XX-ish today market low so from we offline The maybe represents what still can there's double that after. to mean percent. that majority digits of is digital ranges go I we think the of the range

are we're going to Number which new an willing buying try do to a auction. think like two already, matrix and these product operational unseen, that's they're now making is segments and up more are who sight we an than to opening early product not rather be adopter a customer changes historically

sourcing and cars. we And can that easiest our to And tell We one source are we unified from the a vision trends. exact we as now dealer what the long-term of about on they is company, together, are be then are that XXX% can visibility third give way we data all we types is example help seeing of and excited product wholesale have full to this is cars the The retail dealers innovation. those of retail. the can them should acceleration

and So that's data perspective. one a product from example

Another go-to-market. integration our one sales on is tighter and management and account

now have of adoption. early perspective, life It's days at digital wholesale. still into platforms in total it's expertise so with role, his and it's And Zach CarOffer coming from a business. still digital days from decades a we of company couple early of young And other

for a mean I overnight jump business said really but that setting thing, things up start. it's are I -- think of don't the that nice you just I we said an none So future.

mean is a that wouldn't In than Max consumers is selection, price anyone whole this means. convenience, I our we're by excitement I we the we're this the Instant that. think say away and cannibalization of I pivoting think, else, example no, point, Offer Cash any concept -- better great offering

or where places sell car, other your you're up. most offered either come So to drop it pick off it's it

And have up some Others some to going picked are costs want to bring cost like to it it. locally. for to and and sacrifice maximize segments are it willing

So is top which convenience. we're decide letting price, we're them we're giving the a giving the selection the or and having top them matrix then offer by offer, them the dealer

like that has in we're the only So that both offering that. market -- the

from with Ralph is question next Our William Blair. Schackart

some noted question. you improvements in Jason, CarOffer, a operational prior On

of that terms where process in of a you that little if you are sort curious in broadly Just bit improvements? sort operational and on can expand talk making more

own that improvements or forward? all make your operational ability that that does you to Does at need significantly CarOffer, going of that you'll a to ones increase now further increase And then do ability your much rate? faster should

take I'll close to to business it. day. that day Ralph, I'm

talked inspections. about thanks talked for about have a to improvements So mechanical vehicle for we We've the last been look We've trusted understanding the frame electrical. tremendous. arbitration process for Sam customer in dramatically. about the do We've ability led and needed of operational dropping talked asking. upfront vehicle that's buyers a few damage. that inside done much here. quarters tremendous. to We've quality and done and have that's more to been sellers, We to The process

Our been of has out much how margin more got We've transportation business. efficiency led that phenomenal. we've

which efficient, directly So point opportunity day-to-day, at you relationship to exact we've done us to the by the and able do to here. and But on do all control operations advisory, predictable business. manage take to been gives speaking thing you're been run the a to And opportunity we'd the came it is to like Number profitable CarGurus I have business highly terrific. same a has earlier the of of to one, third-party the able efforts that think sort being than later. be

about think it's in digital as out of wholesale came said, said, as digitizing Jason an expert, Zach XX years wholesale. in business And very the of of Hallowell arena. early nowhere as takeover Jason the the largest When industry X you for market --

they product watch we that well buyers market opportunity fit, to platform created think it use that define that programmatic. and leads as we of have operation a using as know we phenomenal sellers is So market the been comfortable largest to it. fit, the in that's his They're marketplace

with or continue term. only to It's the not growth, a product that taking the defining for to market and that's improve over our guy And the think those us of programmatic improvements are a like -- there for we operational business operations day, getting effort. to Zach buy it rest with but perfect to profitable combined long market we with like run advancing day continuing fit XX-hour things business the by and grow now, to the the

we're so you're were, one also thing time you on highest align nothing its -- tough an it's there's to just add X time perform just potential. there's that Sam instance. can integrate to on And perfectly EBITDA Any X let what EBITDA, said. in the horizon, you want to incentives. complement how effectively which step aligned and structure, for measurement else, step -- limited I'll not business If on was closely aligned but because you're to earn-out

and incentives, things total horizon, a time allows of if of And operations entities. alignment so different it's greater scale rather you integration than X efficiency at do can XXX% of there ownership of

with Fong question Marvin is next BTIG. from Our

My on Sell products. new Car A question Great. the

in-store transaction So from versus subscription kind drop-off? sort you margin IMCO a like the CarGurus' what have standpoint, fee is between profile basis have So guys a for way, -- of the the of sounds different do like a matrix driven which do like preference? I for think model you a guys

of that sort second part question. of a And

risk all is dealer dropped if it's netting? at and inspection no that So responsible arbitration off the there dealer? for Is the

Sure. Thanks, different. they're the Marvin, for question. Yes, very

Sell that subscription the oriented a My dealer are So driven is product. Car dealer. offer the top to that It is around leads

business. to extremely it's margin our so high listings similar And

transaction is a consumer revenue rec it I we fee Instant Max preference. and dynamic, know, The to wouldn't as you rev it's say based. whether a have give think and is convenience. the preference more I wouldn't as of Cash gross The Offer, selection -- a

they offer, them sort by And allowing and the so offer right glove doing doing highest And bid the highest X giving by is offers, we're appropriate giving the to whatever highest and we dealer to that. local the feel most them consumer bid. white especially the of by think control dealers we're to most

treatments, -- excited options. Really they days and such very X are frankly, but compare are the about -- My by we Car. different the early giving try it's So in wouldn't and to more really it's And because I the Sell dealer consumer it.

Understood. different to profitable, well. I the topic. a U.K. I I guess or hear question. mean like we'd think Canada a -- both that to tackle I And mean as follow-up is not maybe

feel obviously You Or focus again? internationally guys your on like a enough couple mean ago. expanding I you entertain would narrowed you of your have years fleet? do you

that us types our right all that's out now roll think move priorities that's Canada transaction that in they companies that We those That's where our modified not you're short the by a reason where to the it's is. supporting a And small and and we're into there's hearing well, focus much on achieving expansion bringing opportunity there or so the the those list success rather our of as that U.K. that, are, now. way, doing of but factor. certainly that versions the here, things the we're in countries doing contributing

those existing brand more a as lot a customer power, recognition dealer runway we more more countries, just also There's gives us even with pricing of And model. then satisfaction. but and scale, that our in more get little

John is question with Jefferies. next Our Colantuoni from

about Jefferies. Deal on Digital John a This Maybe at for little is Vincent bit. talk question, first Kardos

leads? whether Xx a multiple bit in push down the Can channel enhancements Xx the talked that is features such tool to where expect and on You've the dealers around lot make higher long or conversion conversion you'd new about converted that features kind stick see that of for more conversion there over bit product if Xx or funnel. then to a that product to down a great the And that you on leads these a further term? about then little about time? Or ways the leads could talk that

for Thanks Sure. question. the

on was can data we've Digital [ name, so your times a Digital aspects funnel. Deal. for the cut point But X yes, -- range has there Vincent -- Xx that ] to higher that given in think, rate user name. do it I a And out different Deal conversion your you reflects

close that. prequalification, prequalification, then end the may for at increase So a they financing that their simply do example, if rate only lower of

further all start with or an getting they setting cases, the phenomenal a further or a conversion to some down on dealers, pull some of you're higher and do trade-in financing combinations to if best with perfect down of the hard things actual and and just getting in ready getting as end, close so like to much deals a do But rates. some deposit, of they penny up rates at if get or or appointment put do to those they're items, run just purchase that appraisal those some the get funnel each they

to as Deal as as pushing they much and they'd can. buying dealer like point And pull consumer consumer path of who's dealer that at that giving the car, is they any decide it they down company going a choice a Digital highway and I decide and can product that they can talk the like so what the sort then get we to mean, into of go any to them as within the about for off on we're the this these levers and selection. give and

boxed don't if online it boxed they in feel as any all So online. they're or if they're of to to in doing doing it not of

will skill summarize, drive the So elements the in combinations close to it's different dealership given rate and set improvement. different the that of

question from Oppenheimer. with Jed And our next is Kelly

Great.

offer. you into Just that as view lead just you about potentially I of Can see more ability do X, dealer more the talk that interest you transactional pay top subscription to this more the product then you as And how share? evolving may. Do gain on higher product an gains scale? if rates? a for by And see

to take if Sam, and first, take you I'll second. want the Thanks, the Jed.

mean very the It's auto yes. are I incredibly So interest XX%. payments average -- high. high. was I right rate rates. interest that morning reading is interest high in Car now this loons incredibly

cars the payment price on more that even We the as car. a of are are We're or for more lower-priced searches searches than predicated seeing seeing rather type of result. total car

who so is consumer absolutely cars. higher-priced seeing lower-priced much cars in our dealers stock tend stock to seeing because And behavior it. we're faster than lead growth are who dealers the And of how changing platform

a the any going get available transparent it the new think has we them, an consumer time share time is I criteria So for finding strongly marketplace because to gives us or search harder more right have to a we're most to consumers. car believe that's opportunity

a because not they can't also get people valuable afford they're car to perfect to going give or hard offer, the And as or a pre-qual or excited who pole do then much we a going get more in coming penny to to it. a near only learn to dealers trade-in a be are deal about ability to we're consumers do get that to to

on cars and So consumers more will our much I site, be site. for we their Also, inventory gives great a features most allows more case. really an it's our our Digital inventory, lower-priced us model, our periods sensitive that that to the shine -- payments. have most transparency And by Deal it on opportunity we are in where having optionality think as search the have because this consumers freemium the to in example, of do they

product a after which in a Jed, customers it the question a versus and about like business I'll us market and phase went trial in and business. build anything XX second on now Car My one, and asked pay-per-lead good jump came regions. then to obviously as pilot this subscription built market to We to is in through Sell testing

a This I time. want goes for I've a manage down it explicit were if to per that when got me. look I over is want budget I basis, up set over it feedback lead to it from wouldn't be time. -- or dealers I And don't a and too on control my at can't budget. pay variable budget.

for opportunities. us a with of is doing they're a paying what Instead, those subscription block

my those I'm an say, to of block leads, able me of that being to going buy opportunity gives So to budget. a manage XXX

more My such and have. to we at dealer a the consumers we side offer, now, have a Sell -- buying more into expected mode we're demand are from Fortunately, where than right Car consumer top

a budgeted a on able But that block. can in a a buy to out basis. we now lead dealers go they're and to second buy per as way a variable third say, as to manage So block, opposed

that. preferred they So

want out leads or who's is of I also for more to And because for a to a leader Manager We're and wonderful. the which -- -- leads to love like -- which monthly the terrific us, a from marketing same for with buyers, the We're recurring at selling a revenue, saying store saying, predictable core buy I'd our business. margin it's I sellers it's runs it's want customer, going consumers. subscription listings General

I more marketing sell at to customers. for I that And own get I those So acquire inventory. the budget can retail. go

this perfect proud our we So business. new win-win really We're product it's of a for launched recently.

closing question-and-answer the have over turn We session. call for like to back remarks. end of would I reached our to the Jason

Thank you.

we just momentum we and thank certainly, shareholders. are appreciate evening, for thank thank business core Thanks to customers -- our and everyone. a want our employees, Have and on in products. great enthusiasm we you interest, hope your our and our -- our hope share I our we everyone as all innovation you did, these for new your So

conclude will today's This you. Thank conference.

participation. And for time. you your at lines your disconnect may this thank You