CarGurus is a high-margin, founder-aligned auto marketplace entering an AI-led compounding phase, with buybacks and an $80.01 probability-weighted five-year target offsetting cyclical risks.
Overview
CarGurus operates an asset-light, two-sided automotive marketplace connecting shoppers with franchise and independent dealers in the U.S., Canada, and the U.K. Approximately 80% or more of revenue comes from recurring dealer subscriptions, supplemented by OEM and finance-provider advertising and SaaS tools. More than 34,500 dealers use the platform, with QARSD above $6,600, while the company benefits from tens of millions of monthly visitors and a leading U.S. traffic position. **The CarOffer wind-down has restored the high-margin marketplace thesis:** non-GAAP gross margin reached 87.0% in Q2 FY2026 and 91.0% in FY2025, while FY2025 free cash flow was $289.0 million. Q2 revenue of $250.97 million grew 7.2% year over year, adjusted EBITDA rose 9.6% to $84.70 million, and EPS increased 15.8% to $0.66. PriceVantage bookings rose more than 50% quarter over quarter and international revenue grew 28%. At approximately 13.1x–13.3x forward P/E and 11.5x EV/EBITDA, with zero long-term debt, valuation appears attractive. Near-term catalysts include Q3 earnings, AI upsells, international scaling, margin resilience, and buybacks exceeding 30% of shares since December 2022.