CarGurus, Inc. (NASDAQ: CARG), an online automotive marketplace, reported solid fourth quarter and full year 2017 results, including total revenue of $90.6 million, a 49 percent increase over the same period the prior year. CarGurus also reported subscription revenue of $80.8 million, a 52 percent increase over fourth quarter revenue of $53.2 million the prior year. Advertising and other revenue was $9.8 million, representing a 30 percent increase over the prior year’s total of $7.6 million.
CarGurus is essentially one-stop online shopping for new and used cars in the U.S. and abroad. Dealers post their inventory, and consumers can search by make, model, body style, price, location, mileage and a host of other features. A simple search provides a wide range of information, including colors available, days on market, deal ratings, vehicle history, photos, price drops and more. Consumers can also sell their own cars on CarGurus, leave reviews, make comments, and get tips and ideas from the site’s blog.
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Other highlights for the fourth quarter include:
- The company generated $7.1 million in cash from operations and $5.5 million in free cash flow.
- GAAP operating income was $4.6 million, less than 1 percent of total revenue.
- Non-GAAP operating income was $4.8 million, or 5 percent of total revenue.
- GAAP net income attributable to common shareholders was $2.1 million, or $0.02 per share, compared to a net loss last year of $28.2 million, or ($0.66) per share.
- Non-GAAP net income was $5.3 million, or $0.05 per share, compared to a net loss of $3.9 million, or ($.027) per share for Q4 2016.
- At year end, CarGurus had cash, cash equivalents and short-term investments of $137.7 million and no debt.
- U.S. revenue was $87.5 million, an increase of 47 percent over Q4 2016. International revenue was $3.1 million, an increase of 171 percent.
‘The fourth quarter marked a strong end to the year,’ said Langley Steinert, CarGurus founder and CEO. ‘Our ability to deliver solid results across our key operating metrics was driven by our disruptive value proposition as consumers continue to recognize our platform as one of the world’s most trusted and transparent automotive marketplaces. We remain well positioned to extend our leadership position given our commitment to innovation and greater brand awareness.’
In terms of subscriptions, at year end, CarGurus had 27,670 total dealers (25,122 U.S. and 2,548 international) posting cars for sale on the CarGurus.com marketplace. Average annual revenue per subscribing dealer in the U.S. was $12,055 at year end, a 16 percent increase over the prior year. Internationally, the average annual revenue per subscribing dealer was $4,904 at year end, a 28 percent increase.
Website traffic and consumer engagement was also up for the fourth quarter:
- U.S. average monthly unique users was 25.7 million, a 25 percent increase.
- U.S. average monthly sessions were 68.5 million, a 43 percent increase.
- International average monthly unique users were 2.8 million, a 53 percent increase.
- International average monthly sessions were 6.1 million, a 69 percent increase.
Highlights from the full year 2017 include:
- Total revenue for the year was $316.9 million, a 60 percent increase over total revenue of $198.1 million in 2016.
- Subscription revenue was $282.7 million, a 65 percent increase over subscription revenue of $171.3 million in 2016.
- Advertising and other revenue was $34.2 million, a 27 percent increase over $26.8 million the prior year.
- GAAP operating income was $15.3 million, or 5 percent of total revenue.
- Non-GAAP operating income was $20.3 million, or 6 percent of total revenue.
- GAAP net income attributable to common shareholders was $7.4 million, or $0.12 per share, compared to a net loss of $25.6 million, or ($0.58) per share the prior year.
- Non-GAAP net income was $15.8 million, or $0.15 per share, compared to a net loss of $6.7 million or ($0.25) per share the prior year.
- The company generated $25.7 million in cash from operations and $18.3 million in free cash flow operations.
The company provided the following guidance for the first quarter:
- Total revenue between $93.5 million to $94.5 million
- Non-GAAP operating revenue between $2.5 million to $3.5 million
- Non-GAAP EPS between $0.01 to $0.02
CarGurus provided the following guidance for the full year 2018:
- Total revenue between $396 million to $400 million
- Non-GAAP operating revenue between $21 million to $25 million
- Non-GAAP EPS between $0.14 to $0.16
Judging by the stock increase, investors seem impressed with CarGurus growth in the fourth quarter. On March 1, the day financials were released, the stock price was valued at $32.32 per share. As of 12:19 p.m. EST yesterday, CarGurus stock was valued at $36.13 per share.
The internet has changed how we shop for everything including household goods, groceries, clothes and now cars. Co-founded by Langley Steinert, co-founder of TripAdvisor in 2006, CarGurus still has a lot of growth potential, judging by its 2017 activity. It is branching out into international markets and is seeing success. With no debt and a solid base of dealers from which to draw recurring revenue, CarGurus seems like it is headed for sunny roads ahead.