Vehicle marketplace company CarGurus posted a smaller profit in the second quarter but higher revenue, with its new Instant Max Cash Offer tool providing a boost.
The Cambridge, Mass., company on Monday reported consolidated net income of $18.1 million in the quarter ended June 30, down 34 percent from a year earlier. Revenue more than doubled to $511.2 million, led by growth in transaction volume linked to the company's Instant Max Cash Offer feature, CFO Scot Fredo told analysts on an earnings call. The tool allows consumers to receive an online instant offer for their vehicle from participating dealerships.
Subscription revenue generated by CarGurus' listings marketplace rose 2 percent to $163.9 million, while wholesale revenue including from its CarOffer platform rose 42 percent to $75.9 million, Fredo said.
The company increased some of its operating expenses, particularly around sales and marketing, though CEO Jason Trevisan told analysts that CarGurus retains a prudent approach toward costs given an uncertain macroeconomic environment.
"The strength in our performance was driven by the acquisition of new dealers and re-engagement of returning dealers on our foundational listings business, operational improvements for our CarOffer business and launch of our innovative digital retail product offerings," Trevisan said in a statement. "The combination of our foundational listings business, coupled with digital wholesale, and digital retail allows us to create a transaction-enabled platform that holistically serves both our dealer partners and largest consumer audience."
CarGurus' paying dealership count was 31,143 as of June 30, up 1 percent from the same quarter a year earlier. In the U.S., CarGurus' paying dealership customer count was 24,488, up from 23,950 a year earlier. CarGurus defines a paying dealer as one "with an active, paid marketplace subscription at the end of a defined period."
Q2 revenue: $511.2 million, more than double from a year earlier
Q2 consolidated net income: $18.1 million, down 34% from a year earlier
Q2 adjusted EBITDA: $54 million, down 19% from a year earlier
Guidance: Third-quarter revenue from $460 million to $490 million