# CarGurus, Inc.: Form 10-Q for the period ended Jun 30, 2025

- Company: [CarGurus, Inc.](/companies/carg.md) (CIK 1494259)
- Form: 10-Q
- Filed: 2025-08-07
- Accepted by EDGAR: Aug 7, 2025, 16:17 ET
- Period: 2025-06-30
- Accession: 0000950170-25-105055
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1494259/000095017025105055/carg-20250630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1494259/000095017025105055/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-04-01 to 2025-06-30 | $234.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2025-01-01 to 2025-06-30 | $459.2m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 6 months, 2025-01-01 to 2025-06-30 | $55.1m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2025-04-01 to 2025-06-30 | $204.4m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2025-01-01 to 2025-06-30 | $404.1m | us-gaap:GrossProfit |
| Research and development | 3 months, 2025-04-01 to 2025-06-30 | $34.4m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2025-01-01 to 2025-06-30 | $70.6m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2025-04-01 to 2025-06-30 | $24.8m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2025-01-01 to 2025-06-30 | $70.6m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2025-04-01 to 2025-06-30 | $5.1m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2025-01-01 to 2025-06-30 | $14.6m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-04-01 to 2025-06-30 | $22.3m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2025-01-01 to 2025-06-30 | $61.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-04-01 to 2025-06-30 | $0.22 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2025-01-01 to 2025-06-30 | $0.60 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-04-01 to 2025-06-30 | $0.23 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2025-01-01 to 2025-06-30 | $0.61 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-04-01 to 2025-06-30 | 100,184,067 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2025-01-01 to 2025-06-30 | 102,614,441 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2025-01-01 to 2025-06-30 | $141.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2025-01-01 to 2025-06-30 | $3.8m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 6 months, 2025-01-01 to 2025-06-30 | $184.6m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2025-06-30 | $231.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-06-30 | $309.0m | us-gaap:AssetsCurrent |
| Total assets | at 2025-06-30 | $726.1m | us-gaap:Assets |
| Current liabilities | at 2025-06-30 | $97.2m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-06-30 | $290.6m | us-gaap:Liabilities |
| Long-term debt | at 2025-06-30 | $0 | us-gaap:LongTermDebt |
| Shareholders' equity | at 2025-06-30 | $435.5m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 91,619 characters.

*You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited interim condensed consolidated financial statements, or the Unaudited Condensed Consolidated Financial Statements, and the related notes thereto, included elsewhere in this Quarterly Report, and our consolidated financial statements and the related notes and other financial information included in our Annual Report. Some of the information contained in this discussion and analysis or elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business and our performance and future success, includes forward-looking statements that involve risks and uncertainties. See “Special Note Regarding Forward-Looking Statements.” For a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis you should review our Annual Report, including those cautionary statements set forth under Part I, Item 1A “Risk Factors,” and in Part II, Item 1A, “Risk Factors,” of this Quarterly Report. We qualify all of our forward-looking statements by such cautionary statements.*

*In this discussion, we use financial measures that are considered non-GAAP financial measures under SEC rules. These rules regarding non-GAAP financial measures require supplemental explanation and reconciliation, which are included elsewhere in this Quarterly Report. Investors should not consider non-GAAP financial measures in isolation from or in substitution for, financial information presented in compliance with U.S. generally accepted accounting principles, or GAAP.*

*This section of this Quarterly Report discusses 2025 and 2024 items and period-to-period comparisons between 2025 and 2024. The period‑to‑period comparison of financial results is not necessarily indicative of future results.*

### Company Overview

CarGurus is a multinational, online automotive platform for buying and selling vehicles that is building upon its industry-leading listings marketplace with digital retail solutions. The CarGurus platform gives consumers the confidence to purchase and/or sell a vehicle either online or in person, and it gives dealerships the power to accurately price, effectively market, instantly acquire, and quickly sell vehicles, all with a nationwide reach. We use proprietary technology, search algorithms, and data analytics to bring trust, transparency, and competitive pricing to the automotive shopping experience.

We operate the following marketplaces:

### U.S., U.K., and Canada U.S. U.K.

#### CarOffer is a subsidiary of CarGurus and operates as an independent brand.

#### Autolist and PistonHeads operate as independent brands.

We have subsidiaries in the U.S., Canada, Ireland, and the U.K. and we have two reportable segments, U.S. Marketplace and Digital Wholesale. See Note 13 of the Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further segment reporting and geographic information.

We derive our revenue from marketplace revenue, wholesale revenue, and product revenue. Marketplace revenue is included in the U.S. Marketplace segment and Other category of segment reporting. Wholesale revenue and product revenue are included in the Digital Wholesale segment. We generate marketplace revenue from (i) dealer subscriptions to our Listings packages, Real-time Performance Marketing, or RPM, our digital advertising suite, Digital Retail, and Sell My Car - Top Dealer Offers, (ii) advertising revenue from auto manufacturers and other auto-related brand advertisers, and (iii) revenue from partnerships with financing services companies. We generate wholesale revenue primarily from (x) transaction fees earned from the purchase and sale of vehicles between dealers, or Dealer-to-Dealer transactions, (y) transaction fees earned from the sale of vehicles to dealers that we acquire at other marketplaces, and (z) transaction fees earned from performing inspection and transportation services, inclusive of Dealer-to-Dealer transactions, other marketplace-to-dealer transactions, and IMCO transactions (as defined below). We generate product revenue primarily from (A) aggregate proceeds received from the sale of vehicles to dealers that were acquired directly from customers, or Sell My Car - Instant Max Cash Offer, or IMCO transactions, and (B) proceeds received from the sale of vehicles that were acquired through arbitration.

For the three months ended June 30, 2025, we generated revenue of $234.0 million, a 7% increase from $218.7 million of revenue for the three months ended June 30, 2024. For the three months ended June 30, 2025, we generated net income of $22.3 million and Adjusted EBITDA, a non-GAAP measure, of $77.3 million, compared to net loss of $68.7 million and Adjusted EBITDA of $55.6 million for the three months ended June 30, 2024.

For the six months ended June 30, 2025, we generated revenue of $459.2 million, a 6% increase from $434.5 million of revenue for the six months ended June 30, 2024. For the six months ended June 30, 2025, we generated net income of $61.4 million and Adjusted EBITDA, a non-GAAP measure, of $143.6 million, compared to net loss of $47.4 million and Adjusted EBITDA of $106.0 million for the six months ended June 30, 2024.

See below for more information regarding our use and reconciliation of Adjusted EBITDA.

### Wind Down of CarOffer

On August 6, 2025, our Board of Directors determined, after considering all reasonably available options and a broader strategic reassessment, that it is in the best interests of our stockholders to wind down CarOffer, including the CarOffer Dealer-to Dealer and Instant Max Cash Offer products, or the CarOffer Transactions Business. Following the broader strategic reassessment, we concluded that the CarOffer Transactions Business has proven less effective in today’s more volatile and unpredictable pricing environment, where dealers require more flexibility and automation to streamline fulfillment than the model could provide. Following the wind-down, we will continue to deliver AI-powered inventory intelligence through our insights platform and enable consumer vehicle sourcing at scale through Top Dealer Offers and will focus on technology and analytics that will enable smarter sourcing and pricing decisions rather than facilitating the transactions themselves.

We expect to substantially complete the wind-down activities in the second half of 2025. As a result of the intended wind-down, we expect to incur total expenditures in the range of approximately $14.0 million to $19.0 million, primarily in the second half of 2025. A significant portion of the cash payments are expected to be paid in the second half of 2025, with the remaining expected to be paid in the first half of 2026.

The estimates of the charges and costs that we expect to incur, and the timing thereof, are subject to a number of assumptions and actual results may differ materially from those described above. In addition, we may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur as a result of or in connection with the wind down of CarOffer, including the CarOffer Transactions Business.

### Key Business Metrics

We regularly review a number of metrics, including the key metrics listed below, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections, and make operating and strategic decisions. We believe it is important to evaluate these metrics, as applicable, for the U.S. and International geographic regions. The International region derives revenue from marketplace revenue from customers outside of the U.S. International markets perform differently from the U.S. market due to a variety of factors, including our operating history in each market, our rate of investment, market size, market maturity, competition, and other dynamics unique to each country.

Historically, we have used data from Google Universal Analytics, or Google Analytics, to measure two of our key business metrics: monthly unique users and monthly sessions. Effective July 1, 2024, Google Analytics 4, or GA4, replaced Google Analytics. The methodologies used in GA4 are different and not comparable to the methodologies used in Google Analytics. As discussed below, we also make certain adjustments to the GA4 data in order to improve the accuracy of the reported monthly unique users and monthly sessions. Due to the change in methodology, we are unable to provide comparable monthly unique user and monthly session information for prior periods, including any periods prior to June 30, 2024.

### Monthly Unique Users

For each of our websites (excluding the CarOffer website), we define a monthly unique user as an individual who has visited any such website and taken a Visitor Action (as defined below) within a calendar month, based on data as measured by GA4. We calculate average monthly unique users as the sum of the monthly unique users of each of our websites in a defined period, divided by the number of months in that period. Effective July 1, 2024, we count a unique user the first time a computer or mobile device with a unique device identifier accesses any of our websites or application during a calendar month and takes an action on such website or in such application, such as performing a search, visiting vehicle detail pages, and connecting with a dealer, which we refer to as a Visitor Action. If an individual accesses a website or application using a different device within a given month, the first Visitor Action taken by each such device is counted as a separate unique user. If an individual uses multiple browsers on a single device and/or clears their cookies and returns to our website or application and takes a Visitor Action within a calendar month, each such Visitor Action is counted as a separate unique user. We eliminate any duplicate unique users that may arise when users visit a webview within our native application. We view our average monthly unique users as a key indicator of the quality of our user experience, the effectiveness of our advertising and traffic acquisition, and the strength of our brand awareness. Measuring unique users is important to us and we believe it provides useful information to our investors because our marketplace revenue depends, in part, on our ability to provide dealers with connections to our users and exposure to our marketplace audience. We define connections as interactions between consumers and dealers on our marketplace through phone calls, email, managed text and chat, and clicks to access the dealer’s website or map directions to the dealership.

*(in thousands)*

*(in thousands)*

| Average Monthly Unique Users | Three Months Ended June 30, 2025 | 2024(1) | Six Months Ended June 30, 2025 | 2024(1) |
| --- | ---: | --- | ---: | --- |
| U.S. | 34,057 | N/A | 34,535 | N/A |
| International | 10,237 | N/A | 10,434 | N/A |
| Total | 44,294 | N/A | 44,969 | N/A |

(1) As a result of the change from Google Analytics to GA4, we are unable to provide comparable monthly unique user information for this period.

### Monthly Sessions

We define monthly sessions as the number of distinct visits to our websites (excluding the CarOffer website) that include a Visitor Action that take place each month within a given time frame, as measured and defined by GA4. We calculate average monthly sessions as the sum of the monthly sessions in a defined period, divided by the number of months in that period. Effective July 1, 2024, a session is defined as beginning with the first Visitor Action from a computer or mobile device and ending at the earliest of when a user closes their browser window or after 30 minutes of inactivity. We eliminate any duplicate monthly sessions that may arise when users visit a webview within our native application. We believe that measuring the volume of sessions in a time period, when considered in conjunction with the number of unique users in that time period, is an important indicator to us of consumer satisfaction and engagement with our marketplace, and we believe it provides useful information to our investors because the more satisfied and engaged consumers we have, the more valuable our service is to dealers.

*(in thousands)*

*(in thousands)*

| Average Monthly Sessions | Three Months Ended June 30, 2025 | 2024(1) | Six Months Ended June 30, 2025 | 2024(1) |
| --- | ---: | --- | ---: | --- |
| U.S. | 84,601 | N/A | 85,159 | N/A |
| International | 21,294 | N/A | 21,760 | N/A |
| Total | 105,895 | N/A | 106,919 | N/A |

(1) As a result of the change from Google Analytics to GA4, we are unable to provide comparable monthly sessions information for this period.

### Number of Paying Dealers

We define a paying dealer as a dealer account with an active, paid marketplace subscription at the end of a defined period. The number of paying dealers we have is important to us and we believe it provides valuable information to investors because it is indicative of the value proposition of our marketplace products, as well as our sales and marketing success and opportunity, including our ability to retain paying dealers and develop new dealer relationships.

| Number of Paying Dealers | As of June 30, 2025 | 2024 |
| --- | ---: | ---: |
| U.S. | 25,478 | 24,446 |
| International | 7,617 | 6,906 |
| Total | 33,095 | 31,352 |

34

### Transactions

We define Transactions within the Digital Wholesale segment as the number of vehicles processed from car dealers, consumers, and other marketplaces through the CarOffer website within the defined period. Transactions consists of each unique vehicle (based on vehicle identification number) that reaches “sold and invoiced” status on the CarOffer website within the defined period, including vehicles sold to car dealers, vehicles sold at third-party auctions, vehicles ultimately sold to a different buyer, and vehicles that are returned to their owners without completion of a sale transaction. We exclude vehicles processed within CarOffer’s intra-group trading solution (Group Trade) from the definition of Transactions, and we only count any unique vehicle once even if it reaches sold status multiple times. The Digital Wholesale segment includes Dealer-to-Dealer transactions and IMCO transactions. We view Transactions as a key business metric, and we believe it provides useful information to investors, because it provides insight into growth and revenue for the Digital Wholesale segment. Transactions drive a significant portion of Digital Wholesale segment revenue. We believe growth in Transactions demonstrates consumer and dealer utilization and our market share penetration in the Digital Wholesale segment. Beginning in the second half of 2025 we expect Transactions to decrease due to the wind-down of CarOffer, including the CarOffer Transactions Business, and cease over time.

| Transactions | Three Months Ended June 30, 2025 | 2024 | Six Months Ended June 30, 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: |
| Transactions | 3,955 | 8,778 | 9,164 | 19,080 |

### Quarterly Average Revenue per Subscribing Dealer (QARSD)

We define QARSD, which is measured at the end of a fiscal quarter, as the marketplace revenue primarily from subscriptions to our Listings packages, RPM, our digital advertising suite, and other digital add-on products during that trailing quarter divided by the average number of paying dealers in that marketplace during the quarter. We calculate the average number of paying dealers for a period by adding the number of paying dealers at the end of such period and the end of the prior period and dividing by two. This information is important to us, and we believe it provides useful information to investors, because we believe that our ability to grow QARSD is an indicator of the value proposition of our products and the return on investment, or ROI, that our paying dealers realize from our products. In addition, increases in QARSD, which we believe reflect the value of exposure to our engaged audience in relation to subscription cost, are driven in part by our ability to grow the volume of connections to our users and the quality of those connections, which result in increased opportunity to upsell package levels and cross-sell additional products to our paying dealers.

| Quarterly Average Revenue per Subscribing Dealer (QARSD) | Three Months Ended June 30, 2025 | 2024 |
| --- | ---: | ---: |
| U.S. | $7,533 | $6,942 |
| International | $2,309 | $1,935 |
| Consolidated | $6,349 | $5,848 |

### Adjusted EBITDA

To provide investors with additional information regarding our financial results, we have presented within this Quarterly Report Adjusted EBITDA, which is a non‑GAAP financial measure. This non‑GAAP financial measure is not based on any standardized methodology prescribed by GAAP, and is not necessarily comparable to any similarly titled measures presented by other companies.

We define Adjusted EBITDA as net income (loss), adjusted to exclude: depreciation and amortization, impairments, stock‑based compensation expense, transaction-related expenses, other income, net, and provision for (benefit from) income taxes.

We use Adjusted EBITDA within this Quarterly Report because it is a key measure used by our management and Board of Directors to understand and evaluate our operating performance, generate future operating plans, and make strategic decisions regarding the allocation of capital. We believe Adjusted EBITDA helps identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects, and allowing for greater transparency with respect to key financial metrics used by our management in its financial and operational decision‑making.

Our Adjusted EBITDA is not prepared in accordance with GAAP, and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA rather than net income, which is the most directly comparable GAAP equivalent. Some of these limitations are:

- Adjusted EBITDA excludes depreciation and amortization expense and, although these are non‑cash expenses, the assets being depreciated may have to be replaced in the future;
- Adjusted EBITDA excludes impairments, which include non-cash one-time expenses associated with the impairment of the CarOffer reporting unit as well as impairments of certain other assets, which may have to be replaced in the future;
- Adjusted EBITDA excludes stock‑based compensation expense, which will be, for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy;
- Adjusted EBITDA excludes transaction-related expenses incurred by us during a reporting period, which are inclusive of certain transaction and integration costs associated with our 2023 acquisition of the remaining minority equity interests in CarOffer and which may not be reflective of our operational performance during such period, for acquisitions that have been completed as of the filing date of our annual or quarterly report (as applicable) relating to such period;
- Adjusted EBITDA excludes other income, net, which consists primarily of interest income earned on our cash, cash equivalents, and foreign exchange gains and losses;
- Adjusted EBITDA excludes the provision for (benefit from) income taxes; and
- other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Because of these limitations, we consider, and you should consider, Adjusted EBITDA together with other operating and financial performance measures presented in accordance with GAAP.

For the three months ended June 30, 2025 and 2024 and for the six months ended June 30, 2025 and 2024, the following table presents a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable measure calculated in accordance with GAAP for each of the periods presented.

*(in thousands)*

*(in thousands)*

| Reconciliation of Adjusted EBITDA: | Three Months Ended June 30, 2025 | 2024 | Six Months Ended June 30, 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: |
| Net income (loss) | $22,343 | $(68,721) | $61,388 | $(47,420) |
| Depreciation and amortization | 6,682 | 5,663 | 13,236 | 13,144 |
| Impairments | 32,552 | 127,655 | 32,552 | 127,655 |
| Stock-based compensation expense | 13,025 | 15,557 | 25,925 | 31,379 |
| Transaction-related expenses | 193 | 265 | 1,280 | 1,076 |
| Other income, net | (2,564) | (3,161) | (5,360) | (6,562) |
| Provision for (benefit from) income taxes | 5,065 | (21,702) | 14,571 | (13,318) |
| Adjusted EBITDA | $77,296 | $55,556 | $143,592 | $105,954 |

37

### Components of Unaudited Condensed Consolidated Income Statements

### Revenue

We derive our revenue from marketplace revenue, wholesale revenue, and product revenue. Marketplace revenue is included in the U.S. Marketplace segment and Other category of segment reporting. Wholesale revenue and product revenue are included in the Digital Wholesale segment. We generate marketplace revenue from (i) dealer subscriptions to our Listings packages, RPM, our digital advertising suite, Digital Retail, and Top Dealer Offers, (ii) advertising revenue from auto manufacturers and other auto‑related brand advertisers, and (iii) revenue from partnerships with financing services companies. We generate wholesale revenue primarily from (x) transaction fees earned from Dealer-to-Dealer transactions, (y) transaction fees earned from the sale of vehicles to dealers that we acquire at other marketplaces, and (z) transaction fees earned from performing inspection and transportation services, inclusive of Dealer-to-Dealer transactions, other marketplace-to-dealer transactions, and IMCO transactions. We generate product revenue primarily from (A) aggregate proceeds received from the sale of vehicles that were acquired through IMCO transactions, and (B) proceeds received from the sale of vehicles that were acquired through arbitration.

### Marketplace Revenue

We offer multiple types of marketplace Listings packages to our dealers for our CarGurus U.S. platform (availability varies on our other marketplaces): Restricted Listings, which is free; and various levels of Listings packages, which each require a paid subscription under a monthly, quarterly, semiannual, or annual subscription basis.

Our subscriptions for customers generally auto-renew on a monthly basis and are cancellable by dealers with 30 days’ advance notice prior to the commencement of the applicable renewal term. Subscription pricing is determined based on a dealer’s inventory size, region, and our assessment of the connections and ROI the platform will provide them and is subject to discounts and/or fee reductions that we may offer from time to time. We also offer all dealers on the platform access to our Dealer Dashboard, which includes a performance summary, Dealer Insights tool, and user review management platform. Only dealers subscribing to a paid Listings package have access to the Pricing Tool, Market Analysis tool, and Instant Market Value Scan tool.

We also offer paid Listings packages for the Autolist and PistonHeads websites.

In addition to displaying inventory in our marketplace and providing access to the Dealer Dashboard, we offer dealers subscribing to certain of our Listings packages other subscription advertising and customer acquisition products and enhancements marketed under RPM and our digital advertising suite. Through RPM, dealers can buy advertising that appears in our marketplace, on other sites on the internet, and/or on high-converting social media platforms. Such advertisements can be targeted by the user’s geography, search history, CarGurus website activity, and a number of other targeting factors, allowing dealers to increase their visibility with in-market consumers and drive qualified traffic for dealers.

We also offer dealer advertising products for the PistonHeads website.

We also offer dealers subscribing to certain of our Listings packages other subscription advertising and customer acquisition products and enhancements such as Digital Retail, which allows shoppers to complete much of the vehicle-purchase process online through the Dealers’ Listings page. Digital Retail is comprised of (i) the Digital Deal Platform, which gives dealers higher quality leads through upfront consumer-provided information; (ii) Geo Expansion, which expands the visibility of a dealer’s inventory in the search results beyond its local market; and (iii) Hard Pull Financing, which provides loan information.

We also offer dealers subscribing to certain of our Listings packages other subscription advertising and customer acquisition products and enhancements such as Top Dealer Offers, which allows dealers to pay for leads to receive direct access to shoppers actively looking to sell their vehicles. Dealers can acquire inventory from shoppers who are looking to sell directly through the CarGurus Sell My Car page.

Marketplace revenue also consists of non-dealer advertising revenue from auto manufacturers and other auto-related brand advertisers sold on a cost-per-thousand impressions basis. An impression is an advertisement loaded on a web page. We also have advertising sold on a cost-per-click basis. Pricing is primarily based on advertisement size and position on our websites and mobile applications. Auto manufacturers and other brand advertisers can execute advertising campaigns that are targeted across a wide variety of parameters, including demographic groups, behavioral characteristics, specific auto brands, categories such as Certified Pre-Owned, and segments such as hybrid vehicles. We do not provide minimum impression guarantees or other types of minimum guarantees in our contracts with customers. Advertising is also sold indirectly through revenue sharing arrangements with advertising exchange partners.

We also offer non-dealer advertising products for the Autolist and PistonHeads websites.

Marketplace revenue also includes revenue from partnerships with certain financing services companies pursuant to which we enable eligible consumers on our CarGurus U.S. website to pre-qualify for financing on cars from dealerships that offer financing through such companies. We primarily generate revenue from these partnerships based on the number of funded loans from consumers who pre-qualify with our lending partners through our site.

### Wholesale Revenue

The CarOffer Matrix enables buying dealers to create standing buy orders and provides instant offers to selling dealers. Wholesale revenue includes transaction fees earned from Dealer-to-Dealer transactions, where we collect fees from both the buying and selling dealers. We also sell vehicles to dealers that we acquire at other marketplaces, where we collect a transaction fee from the buying dealers.

Wholesale revenue also includes fees earned from performing inspection and transportation services, where we collect fees from the buying dealer. Inspection and transportation service revenue is inclusive of Dealer-to-Dealer transactions, other marketplace-to-dealer transactions, and IMCO transactions.

Wholesale revenue also includes arbitration in which the vehicle is rematched to a new buyer and not acquired by us. Arbitration is the process by which we investigate and resolve claims from buying dealers.

Wholesale revenue also includes fees earned from certain guarantees offered to dealers (which include 45-Day Guarantee and OfferGuard products), where we collect fees from the buying dealer or selling dealer, as applicable.

Beginning in the second half of 2025 we expect CarOffer wholesale revenue to decrease due to the wind-down of CarOffer, including the CarOffer Transactions Business, and cease over time.

### Product Revenue

The CarOffer Matrix enables consumers who are selling vehicles to be instantly presented with an offer. Product revenue includes the aggregate proceeds received from the sale of vehicles through IMCO transactions, including vehicle sale price and transaction fees collected from the buying dealers. Product revenue also includes proceeds received from the sale of vehicles acquired through arbitration, including vehicle sale price and transaction fees collected from buying dealers. Arbitration is the process by which we investigate and resolve claims from buying dealers. We control the vehicle in these transactions and, therefore, act as the principal.

Beginning in the second half of 2025 we expect CarOffer product revenue to decrease due to the wind-down of CarOffer, including the CarOffer Transactions Business, and cease over time.

### Cost of Revenue

### Marketplace Cost of Revenue

Marketplace cost of revenue includes expenses related to supporting and hosting marketplace service offerings. These expenses include personnel and related expenses for our customer support team, including salaries, benefits, incentive compensation, and stock-based compensation; third-party service provider expenses such as advertising, data, and hosting expenses; amortization of developed technology; amortization of capitalized website development; amortization of capitalized hosting arrangements; and allocated overhead expenses.

We allocate overhead expenses, such as rent and facility expenses, software expense, and employee benefit expense, to all departments based on headcount. As such, general overhead expenses are reflected in cost of revenue and each operating expense category.

### Wholesale Cost of Revenue

Wholesale cost of revenue includes expenses related to supporting and hosting Digital Wholesale service offerings, including Dealer-to-Dealer transactions and vehicles sold to dealers acquired at other marketplaces on the CarOffer Matrix. These expenses include vehicle transportation and inspection expenses; net losses on vehicles related to guarantees offered to dealers through Dealer-to-Dealer transactions; personnel and related expenses for employees directly involved in the fulfillment and support of transactions, including salaries, benefits, incentive compensation, and stock-based compensation; third-party service provider expenses; amortization of developed technology; amortization and impairment of capitalized website development; and allocated overhead expenses.

We allocate overhead expenses, such as rent and facility expenses, software expense, and employee benefit expense, to all departments based on headcount. As such, general overhead expenses are reflected in cost of revenue and each operating expense category.

Beginning in the second half of 2025 we expect CarOffer wholesale cost of revenue to decrease due to the wind-down of CarOffer, including the CarOffer Transactions Business, and cease over time.

### Product Cost of Revenue

Product cost of revenue includes expenses related to vehicles sold to dealers through IMCO transactions and vehicles sold to dealers acquired through arbitration. These expenses include the cost of the vehicle and transportation expenses.

Beginning in the second half of 2025 we expect CarOffer product cost of revenue to decrease due to the wind-down of CarOffer, including the CarOffer Transactions Business, and cease over time.

### Operating Expenses

### Sales and Marketing

Sales and marketing expense consists primarily of personnel and related expenses for our sales and marketing team, including salaries, benefits, incentive compensation, commissions, and stock-based compensation; expenses associated with consumer marketing, such as traffic acquisition, brand building, and public relations activities; expenses associated with dealer marketing, such as content marketing, customer and promotional events, and industry events; consulting services; software subscription expenses; travel expenses; amortization of capitalized hosting arrangements; and allocated overhead expenses. A portion of our commissions that are related to obtaining a new contract are capitalized and amortized over the estimated benefit period of customer relationships. Other than commissions amortization, all other sales and marketing expenses are expensed as incurred. We expect sales and marketing expense to fluctuate from quarter to quarter due to seasonality and as we respond to changes in the macroeconomic and competitive landscapes affecting our existing dealers, consumer audience, and brand awareness, inclusive of an expected decrease in expense after the wind-down of CarOffer, including the CarOffer Transactions Business, is completed.

### Product, Technology, and Development

Product, technology, and development expense consists primarily of personnel and related expenses for our research and development team, including salaries, benefits, incentive compensation, and stock-based compensation; software subscription expenses; consulting services; and allocated overhead expenses. Other than website development, internal-use software, and hosting arrangement expenses, research and development expenses are expensed as incurred. We expect product, technology, and development expense to fluctuate from quarter to quarter as we invest in additional engineering resources to develop innovative new solutions and make improvements to our existing platform, inclusive of an expected decrease in expense after the wind-down of CarOffer, including the CarOffer Transactions Business, is completed.

### General and Administrative

General and administrative expense consists primarily of personnel and related expenses for our executive, finance, legal, people and talent, and administrative teams, including salaries, benefits, incentive compensation, and stock-based compensation; expenses associated with professional fees for audit, tax, external legal, and consulting services; payment processing and billing expenses; insurance expenses; software subscription expenses; and allocated overhead expenses. General and administrative expense is expensed as incurred. We expect general and administrative expense to increase as we continue to scale our business, offset by an expected decrease in expense after the wind-down of CarOffer, including the CarOffer Transactions Business, is completed.

### Impairments

During the three months ended June 30, 2025, we identified a triggering event that required an interim impairment test at the CarOffer reporting unit due to the sustained low Transaction volume and a delay in the business’s expected return to growth. We performed an updated fair value analysis of the CarOffer reporting unit, and subsequently recognized impairment losses of $0.5 million, $0.3 million, $0.8 million, $4.8 million, $6.6 million, and $19.6 million for right-of-use assets, capitalized hosting arrangements, capitalized internal-use software, capitalized website development costs, intangible assets, and goodwill, respectively. For further discussion of impairments in the CarOffer reporting unit, refer to Note 6 of the Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.

During the three months ended June 30, 2024, we identified a triggering event for impairment testing purposes at the CarOffer reporting unit due to organizational changes and Transaction volume declines, which resulted in revisions to our financial projections for the CarOffer reporting unit. As a result, we performed an updated fair value analysis of the CarOffer reporting unit, and subsequently recognized impairment losses of $4.7 million, $7.6 million, and $115.2 million for right-of-use assets, intangible assets, and goodwill, respectively. For further discussion of goodwill and other asset impairments, refer to Note 6 of the consolidated financial statements contained within the Annual Report.

### Depreciation and Amortization

Depreciation and amortization expense consists of depreciation on property and equipment and amortization of intangible assets and internal-use software.

### Other Income, Net

Other income, net consists primarily of interest income earned on our cash and cash equivalents, as well as foreign exchange gains and losses.

### Provision for (Benefit from) Income Taxes

The provision for (benefit from) income taxes consists of federal and state income taxes in the U.S. and taxes in foreign jurisdictions in which we operate. For the three and six months ended June 30, 2025, a provision for income taxes was recognized as a result of the consolidated taxable income position. For the three and six months ended June 30, 2024, a benefit from income taxes was recognized as a result of the discrete tax benefit associated with the impairment charge despite our consolidated taxable income position.

On July 4, 2025, the One Big Beautiful Bill Act, or the OBBBA, was enacted in the U.S. The OBBBA includes significant tax provisions, such as accelerated cost recovery of qualified property, immediate expensing of U.S.-based research and development costs, and changes to the U.S. international taxation regime. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The impact of these changes will be recognized in the period in which the legislation was enacted. We are currently evaluating the impact of the OBBBA on our future consolidated financial statements and related disclosures and expect material cash tax savings over the next several years. We will continue to monitor developments related to OBBBA and will update our disclosures as appropriate.

### Results of Operations

For the three months ended June 30, 2025 and 2024 and for the six months ended June 30, 2025 and 2024, the Unaudited Condensed Consolidated Income Statements were as follows:

*(dollars in thousands)*

*(dollars in thousands)*

| Revenue: | Three Months Ended June 30, 2025 | 2024 | Six Months Ended June 30, 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: |
| Marketplace | $221,998 | $195,167 | $434,233 | $382,386 |
| Wholesale | 6,275 | 13,119 | 14,022 | 29,244 |
| Product | 5,760 | 10,406 | 10,936 | 22,858 |
| Total revenue | 234,033 | 218,692 | 459,191 | 434,488 |
| Cost of revenue: |  |  |  |  |
| Marketplace | 15,561 | 13,145 | 29,809 | 27,530 |
| Wholesale | 8,347 | 12,633 | 14,517 | 26,857 |
| Product | 5,743 | 10,470 | 10,776 | 22,696 |
| Total cost of revenue | 29,651 | 36,248 | 55,102 | 77,083 |
| Gross profit | 204,382 | 182,444 | 404,089 | 357,405 |
| Operating expenses: |  |  |  |  |
| Sales and marketing | 84,337 | 82,311 | 171,053 | 164,585 |
| Product, technology, and development | 34,370 | 36,580 | 70,620 | 72,125 |
| General and administrative | 27,062 | 27,429 | 53,842 | 55,495 |
| Impairments | 29,633 | 127,475 | 29,633 | 127,475 |
| Depreciation and amortization | 4,136 | 2,233 | 8,342 | 5,025 |
| Total operating expenses | 179,538 | 276,028 | 333,490 | 424,705 |
| Income (loss) from operations | 24,844 | (93,584) | 70,599 | (67,300) |
| Other income, net: |  |  |  |  |
| Interest income | 2,134 | 2,440 | 5,232 | 6,346 |
| Other income, net | 430 | 721 | 128 | 216 |
| Total other income, net | 2,564 | 3,161 | 5,360 | 6,562 |
| Income (loss) before income taxes | 27,408 | (90,423) | 75,959 | (60,738) |
| Provision for (benefit from) income taxes | 5,065 | (21,702) | 14,571 | (13,318) |
| Net income (loss) | $22,343 | $(68,721) | $61,388 | $(47,420) |

42

For the three months ended June 30, 2025 and 2024 and for the six months ended June 30, 2025 and 2024, our segment revenue and our segment income (loss) from operations were as follows:

*(dollars in thousands)*

*(dollars in thousands)*

| Segment Revenue: | Three Months Ended June 30, 2025 | 2024 | Six Months Ended June 30, 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: |
| U.S. Marketplace | $202,652 | $180,052 | $397,880 | $353,040 |
| Digital Wholesale | 12,035 | 23,525 | 24,958 | 52,102 |
| Other | 19,346 | 15,115 | 36,353 | 29,346 |
| Total | $234,033 | $218,692 | $459,191 | $434,488 |
| **Segment Income (Loss) from Operations:** |  |  |  |  |
| U.S. Marketplace | $58,762 | $42,043 | $108,543 | $76,260 |
| Digital Wholesale | (37,041) | (138,158) | (42,820) | (148,498) |
| Other | 3,123 | 2,531 | 4,876 | 4,938 |
| Total | $24,844 | $(93,584) | $70,599 | $(67,300) |

For the three months ended June 30, 2025 and 2024 and for the six months ended June 30, 2025 and 2024, the Unaudited Condensed Consolidated Income Statements as a percentage of total revenue were as follows (amounts in the table below may not sum due to rounding):

| Revenue: | Three Months Ended June 30, 2025 | 2024 | Six Months Ended June 30, 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: |
| Marketplace | 95% | 89% | 95% | 88% |
| Wholesale | 3 | 6 | 3 | 7 |
| Product | 2 | 5 | 2 | 5 |
| Total revenue | 100 | 100 | 100 | 100 |
| Cost of revenue: |  |  |  |  |
| Marketplace | 7 | 6 | 6 | 6 |
| Wholesale | 4 | 6 | 3 | 6 |
| Product | 2 | 5 | 2 | 5 |
| Total cost of revenue | 13 | 17 | 12 | 18 |
| Gross profit | 87 | 83 | 88 | 82 |
| Operating expenses: |  |  |  |  |
| Sales and marketing | 36 | 38 | 37 | 38 |
| Product, technology, and development | 15 | 17 | 15 | 17 |
| General and administrative | 12 | 13 | 12 | 13 |
| Impairments | 13 | 58 | 6 | 29 |
| Depreciation and amortization | 2 | 1 | 2 | 1 |
| Total operating expenses | 77 | 126 | 73 | 98 |
| Income (loss) from operations | 11 | (43) | 15 | (15) |
| Other income, net: |  |  |  |  |
| Interest income | 1 | 1 | 1 | 1 |
| Other income, net | 0 | 0 | 0 | 0 |
| Total other income, net | 1 | 1 | 1 | 2 |
| Income (loss) before income taxes | 12 | (41) | 17 | (14) |
| Provision for (benefit from) income taxes | 2 | (10) | 3 | (3) |
| Net income (loss) | 10% | (31)% | 13% | (11)% |

43

For the three months ended June 30, 2025 and 2024 and for the six months ended June 30, 2025 and 2024, our segment revenue as a percentage of total revenue and our segment income (loss) from operations as a percentage of segment revenue were as follows (amounts in the table below may not sum due to rounding):

| Segment Revenue: | Three Months Ended June 30, 2025 | 2024 | Six Months Ended June 30, 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: |
| U.S. Marketplace | 87% | 82% | 87% | 81% |
| Digital Wholesale | 5 | 11 | 5 | 12 |
| Other | 8 | 7 | 8 | 7 |
| Total | 100% | 100% | 100% | 100% |
| **Segment Income (Loss) from Operations:** |  |  |  |  |
| U.S. Marketplace | 29% | 23% | 27% | 22% |
| Digital Wholesale | (308) | (587) | (172) | (285) |
| Other | 16 | 17 | 13 | 17 |
| Total | 11% | (43)% | 15% | (15)% |

### For the three months ended June 30, 2025 and 2024

### Revenue

Revenue by Source

*(dollars in thousands)*

| Revenue: | Three Months Ended June 30, 2025 | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Marketplace | $221,998 | $195,167 | $26,831 | 14% |
| Wholesale | 6,275 | 13,119 | (6,844) | (52) |
| Product | 5,760 | 10,406 | (4,646) | (45) |
| Total | $234,033 | $218,692 | $15,341 | 7% |
| **Percentage of total revenue:** |  |  |  |  |
| Marketplace | 95% | 89% |  |  |
| Wholesale | 3 | 6 |  |  |
| Product | 2 | 5 |  |  |
| Total | 100% | 100% |  |  |

Overall revenue increased $15.3 million, or 7%, in the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

Marketplace revenue increased $26.8 million, or 14%, in the three months ended June 30, 2025, compared to the three months ended June 30, 2024, and represented 95% of total revenue for the three months ended June 30, 2025, compared to 89% of total revenue for the three months ended June 30, 2024. The increase was due primarily to an increase in Listings revenue, as a result of strong growth in both paying dealer count and QARSD. We have increased wallet share across our dealer base, driven by upgrades, broader adoption of add-on products, and like-for-like price increases. The increase was also due in part to an increase in advertising revenue due primarily to increased spend by advertisers related to new and existing campaigns.

Wholesale revenue decreased $6.8 million, or 52%, in the three months ended June 30, 2025, compared to the three months ended June 30, 2024, and represented 3% of total revenue for the three months ended June 30, 2025, compared to 6% of total revenue for the three months ended June 30, 2024. The decrease was due primarily to a 55% decrease in Transactions, which includes Dealer-to-Dealer transactions and IMCO transactions, to 3,955 for the three months ended June 30, 2025, compared to 8,778 for the three months ended June 30, 2024.

Product revenue decreased $4.6 million, or 45%, in the three months ended June 30, 2025, compared to the three months ended June 30, 2024, and represented 2% of total revenue for the three months ended June 30, 2025, compared to 5% of total revenue for the three months ended June 30, 2024. The decrease was due primarily to a decrease in proceeds received from the sale of vehicles through IMCO transactions and proceeds received from the sale of vehicles acquired through arbitration, as a result of lower Transaction volume.

Segment Revenue

*(dollars in thousands)*

| Revenue: | Three Months Ended June 30, 2025 | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| U.S. Marketplace | $202,652 | $180,052 | $22,600 | 13% |
| Digital Wholesale | 12,035 | 23,525 | (11,490) | (49) |
| Other | 19,346 | 15,115 | 4,231 | 28 |
| Total | $234,033 | $218,692 | $15,341 | 7% |
| **Percentage of total revenue:** |  |  |  |  |
| U.S. Marketplace | 87% | 82% |  |  |
| Digital Wholesale | 5 | 11 |  |  |
| Other | 8 | 7 |  |  |
| Total | 100% | 100% |  |  |

U.S. Marketplace segment revenue increased $22.6 million, or 13%, in the three months ended June 30, 2025, compared to the three months ended June 30, 2024, and represented 87% of total revenue for the three months ended June 30, 2025, compared to 82% of total revenue for the three months ended June 30, 2024. The increase was due primarily to a $26.8 million increase in marketplace revenue, as described above.

Digital Wholesale segment revenue, which is comprised of wholesale revenue and product revenue, decreased $11.5 million, or 49%, in the three months ended June 30, 2025, compared to the three months ended June 30, 2024, and represented 5% of total revenue for the three months ended June 30, 2025, compared to 11% of total revenue for the three months ended June 30, 2024. The decrease in Digital Wholesale segment revenue was due to a $6.8 million decrease in wholesale revenue and a $4.6 million decrease in product revenue, as described above.

### Cost of Revenue

*(dollars in thousands)*

| Cost of Revenue: | Three Months Ended June 30, 2025 | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Marketplace | $15,561 | $13,145 | $2,416 | 18% |
| Wholesale | 8,347 | 12,633 | (4,286) | (34) |
| Product | 5,743 | 10,470 | (4,727) | (45) |
| Total | $29,651 | $36,248 | $(6,597) | (18)% |
| **Percentage of total revenue:** |  |  |  |  |
| Marketplace | 7% | 6% |  |  |
| Wholesale | 4 | 6 |  |  |
| Product | 2 | 5 |  |  |
| Total | 13% | 17% |  |  |

Overall cost of revenue decreased $6.6 million, or 18%, in the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

Marketplace cost of revenue increased $2.4 million, or 18%, in the three months ended June 30, 2025, compared to the three months ended June 30, 2024, and represented 7% of total revenue for the three months ended June 30, 2025, compared to 6% of total revenue for the three months ended June 30, 2024. The increase was due primarily to a $1.2 million increase in amortization due to new capitalized website development projects that were put into service after June 30, 2024, and a $0.4 million increase in data costs due to higher overall usage.

Wholesale cost of revenue decreased $4.3 million, or 34%, in the three months ended June 30, 2025, compared to the three months ended June 30, 2024, and represented 4% of total revenue for the three months ended June 30, 2025, compared to 6% of total revenue for the three months ended June 30, 2024. The decrease was due primarily to a $3.9 million decrease in transportation expense, inspection expense, and data and other transaction fees as a result of lower Transaction volume. The decrease was also due in part to a $2.2 million decrease in amortization, due primarily to the end of the CG Buy Online pilot during the third quarter of 2024, as well as a decrease in amortization of capitalized website development due to a project that became fully amortized in 2024. The decrease was offset in part by a $2.7 million increase in impairment of capitalized website development costs. For further discussion of impairments in the CarOffer reporting unit, refer to Note 6 of the Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.

Product cost of revenue decreased $4.7 million, or 45%, in the three months ended June 30, 2025, compared to the three months ended June 30, 2024, and represented 2% of total revenue for the three months ended June 30, 2025, compared to 5% of total revenue for the three months ended June 30, 2024. The decrease was due primarily to a decrease in expenses related to vehicles sold to dealers through IMCO transactions and related to vehicles sold to dealers acquired through arbitration as a result of lower Transaction volume.

### Operating Expenses

Sales and Marketing Expense

*(dollars in thousands)*

|  | Three Months Ended June 30, 2025 | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Sales and marketing | $84,337 | $82,311 | $2,026 | 2% |
| Percentage of total revenue | 36% | 38% |  |  |

Sales and marketing expense increased $2.0 million, or 2%, in the three months ended June 30, 2025, compared to the three months ended June 30, 2024. The increase was due primarily to a $4.2 million increase in advertising and marketing expense for our brand awareness campaigns. The increase was offset in part by a $1.3 million decrease in salaries and employee-related expenses due primarily to changes in headcount. The increase was also offset in part by a $0.7 million decrease in rent expense due to the expiration of the leases of office space at 55 Cambridge Parkway and 2 Canal Park.

Product, Technology, and Development Expense

*(dollars in thousands)*

|  | Three Months Ended June 30, 2025 | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Product, technology, and development | $34,370 | $36,580 | $(2,210) | (6)% |
| Percentage of total revenue | 15% | 17% |  |  |

Product, technology, and development expense decreased $2.2 million, or 6%, in the three months ended June 30, 2025, compared to the three months ended June 30, 2024. The decrease was due primarily to a $0.9 million decrease in rent expense, due to the expiration of the leases of office space at 55 Cambridge Parkway and 2 Canal Park. The decrease was also due in part to a $0.5 million decrease in salaries and employee-related expense, exclusive of stock-based compensation, due primarily to changes in headcount. The decrease was also due in part to a $0.5 million decrease in stock-based compensation due primarily to completed vesting of existing awards and forfeitures from employee departures, partially offset by new grants.

General and Administrative Expense

*(dollars in thousands)*

|  | Three Months Ended June 30, 2025 | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| General and administrative | $27,062 | $27,429 | $(367) | (1)% |
| Percentage of total revenue | 12% | 13% |  |  |

General and administrative expense decreased $0.4 million, or 1%, in the three months ended June 30, 2025, compared to the three months ended June 30, 2024. The decrease was due primarily to a $1.8 million decrease in stock-based compensation, due primarily to completed vesting of existing awards and forfeitures from employee departures, partially offset by new grants. The decrease was offset in part by a $0.6 million increase in consultant and recruiting fees and a $0.5 million increase in payment processing expenses.

Impairment Expense

*(dollars in thousands)*

|  | Three Months Ended June 30, 2025 | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Impairments | $29,633 | $127,475 | $(97,842) | (77)% |
| Percentage of total revenue | 13% | 58% |  |  |

Impairment expense decreased $97.8 million, or 77%, in the three months ended June 30, 2025, compared to the three months ended June 30, 2024. The decrease was due primarily to $29.6 million of impairment losses in the three months ended June 30, 2025, compared to $127.5 million in impairment losses in the three months ended June 30, 2024, both related to the CarOffer reporting unit. For further discussion of impairments in the CarOffer reporting unit, refer to Note 6 of the Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report and Note 6 of the consolidated financial statements contained within the Annual Report.

Depreciation and Amortization Expense

*(dollars in thousands)*

|  | Three Months Ended June 30, 2025 | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Depreciation and amortization | $4,136 | $2,233 | $1,903 | 85% |
| Percentage of total revenue | 2% | 1% |  |  |

Depreciation and amortization expense increased $1.9 million, or 85%, in the three months ended June 30, 2025, compared to the three months ended June 30, 2024. The increase was due primarily to a $2.1 million increase in depreciation due primarily to assets placed in service associated with the 1001 Boylston Street lease.

### Other Income, net

*(dollars in thousands)*

| Other income, net: | Three Months Ended June 30, 2025 | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Interest income | $2,134 | $2,440 | $(306) | (13)% |
| Other income, net | 430 | 721 | (291) | (40) |
| Total other income, net | $2,564 | $3,161 | $(597) | (19)% |
| **Percentage of total revenue:** |  |  |  |  |
| Interest income | 1% | 1% |  |  |
| Other income, net | 0 | 0 |  |  |
| Total other income, net | 1% | 1% |  |  |

Total other income, net was relatively flat in the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

### Provision for (Benefit from) Income Taxes

*(dollars in thousands)*

|  | Three Months Ended June 30, 2025 | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | --- |
| Provision for (benefit from) income taxes | $5,065 | $(21,702) | $26,767 | NM(1) |
| Percentage of total revenue | 2% | (10)% |  |  |

(1) Not meaningful.

Provision for (benefit from) income taxes changed $26.8 million in the three months ended June 30, 2025, compared to the three months ended June 30, 2024. The change was due primarily to increased profitability and the recognition of an $8.0 million discrete deferred tax benefit in association with the goodwill and long-lived assets impairment charges related to the CarOffer reporting unit recognized during the three months ended June 30, 2025, compared to $31.5 million discrete deferred tax benefit in association with the goodwill and long-lived assets impairment charges related to the CarOffer reporting unit recognized during the three months ended June 30, 2024.

### Segment Income (Loss) from Operations

*(dollars in thousands)*

| Segment Income (Loss) from Operations: | Three Months Ended June 30, 2025 | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| U.S. Marketplace | $58,762 | $42,043 | $16,719 | 40% |
| Digital Wholesale | (37,041) | (138,158) | 101,117 | 73 |
| Other | 3,123 | 2,531 | 592 | 23 |
| Total | $24,844 | $(93,584) | $118,428 | NM(1) |
| **Percentage of segment revenue:** |  |  |  |  |
| U.S. Marketplace | 29% | 23% |  |  |
| Digital Wholesale | (308) | (587) |  |  |
| Other | 16 | 17 |  |  |
| Total | 11% | (43)% |  |  |

(1) Not meaningful.

U.S. Marketplace segment income from operations increased $16.7 million, or 40%, in the three months ended June 30, 2025, compared to the three months ended June 30, 2024, and represented 29% of U.S. Marketplace segment revenue for the three months ended June 30, 2025, compared to 23% of U.S. Marketplace segment revenue for the three months ended June 30, 2024. The increase was due to an increase in revenue of $22.6 million, an increase in cost of revenue of $1.9 million, and an increase in operating expenses of $4.0 million.

Digital Wholesale segment loss from operations decreased $101.1 million, or 73%, in the three months ended June 30, 2025, compared to the three months ended June 30, 2024, and represented (308)% of Digital Wholesale segment revenue for the three months ended June 30, 2025, compared to (587)% of Digital Wholesale segment revenue for the three months ended June 30, 2024. The decrease was due primarily to a decrease in revenue of $11.5 million, a decrease in cost of revenue of $9.0 million, and a decrease in operating expenses of $103.6 million. The decrease in cost of revenue was offset in part by $2.9 million of impairment charges related to the CarOffer reporting unit during the three months ended June 30, 2025, compared to $0.2 million of impairment charges related to capitalized website development costs that we decided to cease investment, for the three months ended June 30, 2024. The decrease in operating expenses was primarily driven by $29.6 million of impairment operating expense during the three months ended June 30, 2025, compared to $127.5 million of impairment operating expense during the three months ended June 30, 2024, both related to the CarOffer reporting unit. For further discussion of impairments in the CarOffer reporting unit, refer to Note 6 of the Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report and Note 6 of the consolidated financial statements contained within the Annual Report.

### For the six months ended June 30, 2025 and 2024

### Revenue

Revenue by Source

*(dollars in thousands)*

| Revenue: | Six Months Ended June 30, 2025 | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Marketplace | $434,233 | $382,386 | $51,847 | 14% |
| Wholesale | 14,022 | 29,244 | (15,222) | (52) |
| Product | 10,936 | 22,858 | (11,922) | (52) |
| Total | $459,191 | $434,488 | $24,703 | 6% |
| **Percentage of total revenue:** |  |  |  |  |
| Marketplace | 95% | 88% |  |  |
| Wholesale | 3 | 7 |  |  |
| Product | 2 | 5 |  |  |
| Total | 100% | 100% |  |  |

Overall revenue increased $24.7 million, or 6%, in the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

Marketplace revenue increased $51.8 million, or 14%, in the six months ended June 30, 2025, compared to the six months ended June 30, 2024, and represented 95% of total revenue for the six months ended June 30, 2025, compared to 88% of total revenue for the six months ended June 30, 2024. The increase was due primarily to an increase in Listings revenue, as a result of strong growth in both paying dealer count and QARSD. We have increased wallet share across our dealer base, driven by upgrades, broader adoption of add-on products, and like-for-like price increases. The increase was also due in part to an increase in advertising revenue due primarily to increased spend by advertisers related to new and existing campaigns.

Wholesale revenue decreased $15.2 million, or 52%, in the six months ended June 30, 2025, compared to the six months ended June 30, 2024, and represented 3% of total revenue for the six months ended June 30, 2025, compared to 7% of total revenue for the six months ended June 30, 2024. The decrease was due primarily to a 52% decrease in Transactions, which includes Dealer-to-Dealer transactions and IMCO transactions, to 9,164 for the six months ended June 30, 2025, compared to 19,080 for the six months ended June 30, 2024.

Product revenue decreased $11.9 million, or 52%, in the six months ended June 30, 2025, compared to the six months ended June 30, 2024, and represented 2% of total revenue for the six months ended June 30, 2025, compared to 5% of total revenue for the six months ended June 30, 2024. The decrease was due primarily to a decrease in proceeds received from the sale of vehicles through IMCO transactions and proceeds received from the sale of vehicles acquired through arbitration as a result of lower Transaction volume.

Segment Revenue

*(dollars in thousands)*

| Revenue: | Six Months Ended June 30, 2025 | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| U.S. Marketplace | $397,880 | $353,040 | $44,840 | 13% |
| Digital Wholesale | 24,958 | 52,102 | (27,144) | (52) |
| Other | 36,353 | 29,346 | 7,007 | 24 |
| Total | $459,191 | $434,488 | $24,703 | 6% |
| **Percentage of total revenue:** |  |  |  |  |
| U.S. Marketplace | 87% | 81% |  |  |
| Digital Wholesale | 5 | 12 |  |  |
| Other | 8 | 7 |  |  |
| Total | 100% | 100% |  |  |

U.S. Marketplace segment revenue increased $44.8 million, or 13%, in the six months ended June 30, 2025, compared to the six months ended June 30, 2024, and represented 87% of total revenue for the six months ended June 30, 2025, compared to 81% of total revenue for the six months ended June 30, 2024. The increase was due primarily to a $51.8 million increase in marketplace revenue, as described above.

Digital Wholesale segment revenue, which is comprised of wholesale revenue and product revenue, decreased $27.1 million, or 52%, in the six months ended June 30, 2025, compared to the six months ended June 30, 2024, and represented 5% of total revenue for the six months ended June 30, 2025, compared to 12% of total revenue for the six months ended June 30, 2024. The decrease in Digital Wholesale segment revenue was due to a $15.2 million decrease in wholesale revenue and an $11.9 million decrease in product revenue, as described above.

### Cost of Revenue

*(dollars in thousands)*

| Cost of Revenue: | Six Months Ended June 30, 2025 | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Marketplace | $29,809 | $27,530 | $2,279 | 8% |
| Wholesale | 14,517 | 26,857 | (12,340) | (46) |
| Product | 10,776 | 22,696 | (11,920) | (53) |
| Total | $55,102 | $77,083 | $(21,981) | (29)% |
| **Percentage of total revenue:** |  |  |  |  |
| Marketplace | 6% | 6% |  |  |
| Wholesale | 3 | 6 |  |  |
| Product | 2 | 5 |  |  |
| Total | 12% | 18% |  |  |

Overall cost of revenue decreased $22.0 million, or 29%, in the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

Marketplace cost of revenue increased $2.3 million, or 8%, in the six months ended June 30, 2025, compared to the six months ended June 30, 2024, and represented 6% of total revenue for both the six months ended June 30, 2025 and 2024. The increase was due primarily to a $1.6 million increase in amortization due to new capitalized website development projects that were put into service after June 30, 2024, and a $0.5 million increase in data costs due to higher overall usage.

Wholesale cost of revenue decreased $12.3 million, or 46%, in the six months ended June 30, 2025, compared to the six months ended June 30, 2024, and represented 3% of total revenue for the six months ended June 30, 2025, compared to 6% of total revenue for the six months ended June 30, 2024. The decrease was due primarily to a $8.3 million decrease in transportation expense, inspection expense, and data and other transaction fees as a result of lower Transaction volume. The decrease was also due in part to a $4.9 million decrease in amortization due primarily to the end of the CG Buy Online pilot during the third quarter of 2024, as well as a decrease in amortization of capitalized website development due to a project that became fully amortized in 2024. The decrease was offset in part by a $2.7 million increase in impairment of capitalized website development costs. For further discussion of impairments in the CarOffer reporting unit, refer to Note 6 of the Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.

Product cost of revenue decreased $11.9 million, or 53%, in the six months ended June 30, 2025, compared to the six months ended June 30, 2024, and represented 2% of total revenue for the six months ended June 30, 2025, compared to 5% of total revenue for the six months ended June 30, 2024. The decrease was due primarily to a decrease in expenses related to vehicles sold to dealers through IMCO transactions and related to vehicles sold to dealers acquired through arbitration as a result of lower Transaction volume.

### Operating Expenses

Sales and Marketing Expense

*(dollars in thousands)*

|  | Six Months Ended June 30, 2025 | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Sales and marketing | $171,053 | $164,585 | $6,468 | 4% |
| Percentage of total revenue | 37% | 38% |  |  |

Sales and marketing expense increased $6.5 million, or 4%, in the six months ended June 30, 2025, compared to the six months ended June 30, 2024. The increase was due primarily to an $8.0 million increase in advertising and marketing expense for our brand awareness campaigns and our performance marketing vendors. The increase in sales and marketing expense was offset in part by a $1.5 million decrease in rent expense, due to the expiration of the leases of office space at 55 Cambridge Parkway and 2 Canal Park.

Product, Technology, and Development Expense

*(dollars in thousands)*

|  | Six Months Ended June 30, 2025 | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Product, technology, and development | $70,620 | $72,125 | $(1,505) | (2)% |
| Percentage of total revenue | 15% | 17% |  |  |

Product, technology, and development expense decreased $1.5 million, or 2%, in the six months ended June 30, 2025, compared to the six months ended June 30, 2024. The decrease was due primarily to a $1.9 million decrease in rent expense due to the expiration of the leases of office space at 55 Cambridge Parkway and 2 Canal Park.

General and Administrative Expense

*(dollars in thousands)*

|  | Six Months Ended June 30, 2025 | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| General and administrative | $53,842 | $55,495 | $(1,653) | (3)% |
| Percentage of total revenue | 12% | 13% |  |  |

52

General and administrative expense decreased $1.7 million, or 3%, in the six months ended June 30, 2025, compared to the six months ended June 30, 2024. The decrease was due primarily to a $4.1 million decrease in stock-based compensation, due primarily to completed vesting of existing awards and forfeitures from employee departures, partially offset by new grants. The decrease was also due in part to a $1.0 million decrease in rent expense due to the expiration of the leases of office space at 55 Cambridge Parkway and 2 Canal Park. The decrease was offset in part by a $1.2 million increase in indirect tax expense, a $0.9 million increase in payment processing expenses, and a $0.7 million increase in consultant and recruiting fees.

Impairment Expense

*(dollars in thousands)*

|  | Six Months Ended June 30, 2025 | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Impairments | $29,633 | $127,475 | $(97,842) | (77)% |
| Percentage of total revenue | 6% | 29% |  |  |

Impairment expense decreased $97.8 million, or 77%, in the six months ended June 30, 2025, compared to the six months ended June 30, 2024. The decrease was due primarily to $29.6 million of impairment losses in the three months ended June 30, 2025, compared to $127.5 million in impairment losses in the three months ended June 30, 2024, related to the CarOffer reporting unit. For further discussion of impairments in the CarOffer reporting unit, refer to Note 6 of the Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report and Note 6 of the consolidated financial statements contained within the Annual Report.

Depreciation and Amortization Expense

*(dollars in thousands)*

|  | Six Months Ended June 30, 2025 | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Depreciation and amortization | $8,342 | $5,025 | $3,317 | 66% |
| Percentage of total revenue | 2% | 1% |  |  |

Depreciation and amortization expense increased $3.3 million, or 66%, in the six months ended June 30, 2025, compared to the six months ended June 30, 2024. The increase was due primarily to a $4.1 million increase in depreciation due primarily to assets placed in service associated with the 1001 Boylston Street lease.

### Other Income, net

*(dollars in thousands)*

| Other income, net: | Six Months Ended June 30, 2025 | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Interest income | $5,232 | $6,346 | $(1,114) | (18)% |
| Other income, net | 128 | 216 | (88) | (41) |
| Total other income, net | $5,360 | $6,562 | $(1,202) | (18)% |
| **Percentage of total revenue:** |  |  |  |  |
| Interest income | 1% | 1% |  |  |
| Other income, net | 0 | 0 |  |  |
| Total other income, net | 1% | 2% |  |  |

53

Total other income, net decreased $1.2 million, or 18%, in the six months ended June 30, 2025, compared to the six months ended June 30, 2024. The $1.1 million decrease in interest income was due primarily to the sale of interest-bearing short-term investments during the three months ended March 31, 2024. Other income, net was relatively flat for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

### Provision for (Benefit from) Income Taxes

*(dollars in thousands)*

|  | Six Months Ended June 30, 2025 | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | --- |
| Provision for (benefit from) income taxes | $14,571 | $(13,318) | $27,889 | NM(1) |
| Percentage of total revenue | 3% | (3)% |  |  |

(1) Not meaningful.

Provision for (benefit from) income taxes changed $27.9 million in the six months ended June 30, 2025, compared to the six months ended June 30, 2024. The change was due primarily to increased profitability and the recognition of an $8.0 million discrete deferred tax benefit in association with the goodwill and long-lived assets impairment charges related to the CarOffer reporting unit recognized during the six months ended June 30, 2025, compared to $31.5 million discrete deferred tax benefit in association with the goodwill and long-lived assets impairment charges related to the CarOffer reporting unit recognized during the six months ended June 30, 2024.

### Segment Income (Loss) from Operations

*(dollars in thousands)*

| Segment Income (Loss) from Operations: | Six Months Ended June 30, 2025 | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| U.S. Marketplace | $108,543 | $76,260 | $32,283 | 42% |
| Digital Wholesale | (42,820) | (148,498) | 105,678 | 71 |
| Other | 4,876 | 4,938 | (62) | (1) |
| Total | $70,599 | $(67,300) | $137,899 | NM(1) |
| **Percentage of segment revenue:** |  |  |  |  |
| U.S. Marketplace | 27% | 22% |  |  |
| Digital Wholesale | (172) | (285) |  |  |
| Other | 13 | 17 |  |  |
| Total | 15% | (15)% |  |  |

(1) Not meaningful.

U.S. Marketplace segment income from operations increased $32.3 million, or 42%, in the six months ended June 30, 2025, compared to the six months ended June 30, 2024, and represented 27% of U.S. Marketplace segment revenue for the six months ended June 30, 2025, compared to 22% of U.S. Marketplace segment revenue for the six months ended June 30, 2024. The increase was due to an increase in revenue of $44.8 million, an increase in cost of revenue of $1.4 million, and an increase in operating expenses of $11.2 million.

Digital Wholesale segment loss from operations decreased $105.7 million, or 71%, in the six months ended June 30, 2025, compared to the six months ended June 30, 2024, and represented (172)% of Digital Wholesale segment revenue for the six months ended June 30, 2025, compared to (285)% of Digital Wholesale segment revenue for the six months ended June 30, 2024. The decrease was due primarily to a decrease in revenue of $27.1 million, a decrease in cost of revenue of $24.3 million, and a decrease in operating expenses of $108.6 million. The decrease in cost of revenue was offset in part by $2.9 million of impairment charges related to the CarOffer reporting unit during the six months ended June 30, 2025, compared to $0.2 million of impairment charges related to capitalized website development costs that we decided to cease investment, for the six months ended June 30, 2024. The decrease in operating expenses was primarily driven by $29.6 million of impairment operating expense during the six months ended June 30, 2025, compared to $127.5 million of impairment operating expense for the six months ended June 30, 2024, both related to the CarOffer reporting unit. For further discussion of impairments in the CarOffer reporting unit, refer to Note 6 of the Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report and Note 6 of the consolidated financial statements contained within the Annual Report.

### Liquidity and Capital Resources

### Cash, Cash Equivalents, and Borrowing Capacity

As of June 30, 2025 and December 31, 2024, our principal sources of liquidity were cash and cash equivalents of $231.2 million and $304.2 million, respectively. As of June 30, 2025, our borrowing capacity under the 2022 Revolver (as defined below) was $390.6 million.

### Sources and Uses of Cash

During the six months ended June 30, 2025 and 2024, our cash flows from operating, investing, and financing activities, as reflected in the Unaudited Condensed Consolidated Statements of Cash Flows, were as follows:

*(in thousands)*

|  | Six Months Ended June 30, 2025 | 2024 |
| --- | ---: | ---: |
| Net cash provided by operating activities | $140,998 | $123,561 |
| Net cash used in investing activities | (15,476) | (44,373) |
| Net cash used in financing activities | (200,537) | (153,975) |
| Impact of foreign currency on cash | 2,135 | (774) |
| Net decrease in cash, cash equivalents, and restricted cash | $(72,880) | $(75,561) |

Our operations have been financed primarily from operating activities. During the six months ended June 30, 2025 and 2024, we generated cash from operating activities of $141.0 million and $123.6 million, respectively.

On September 26, 2022, we entered into a Credit Agreement with PNC Bank, National Association, as administrative agent and collateral agent and an L/C Issuer (as defined in the Credit Agreement), and the other lenders, L/C Issuers, and parties thereto from time to time, or the Credit Agreement. The Credit Agreement consists of a revolving credit facility, or the 2022 Revolver, which allows us to borrow up to $400.0 million, $50.0 million of which may be comprised of a letter of credit sub-facility, or 2022 Revolver Sub-facility. The borrowing capacity under the Credit Agreement may be increased in accordance with the terms and subject to the adjustments as set forth in the Credit Agreement. Specifically, the borrowing capacity may be increased by an amount up to the greater of $250.0 million or 100% of Four Quarter Consolidated EBITDA (as defined in the Credit Agreement) if certain criteria are met and subject to certain restrictions. Any such increase requires lender approval. Proceeds of any borrowings may be used for general corporate purposes. The 2022 Revolver is scheduled to mature on September 26, 2027. As of June 30, 2025, there were no borrowings and $9.4 million in letters of credit outstanding under the 2022 Revolver Sub-facility associated with our leases, which reduced the borrowing capacity under the 2022 Revolver to $390.6 million. As of December 31, 2024, there were no borrowings and $9.9 million in letters of credit outstanding under the 2022 Revolver Sub-facility associated with our leases, which reduced the borrowing capacity under the 2022 Revolver to $390.1 million.

We believe that our existing sources of liquidity, including access to the 2022 Revolver, will be sufficient to fund our operations for at least the next 12 months from the date of the filing of this Quarterly Report. Our future capital requirements will depend on many factors, including our revenue; expenses associated with our sales and marketing activities and the support of our product, technology, and development efforts; payments received in advance from a third-party transaction processor; activity under the 2025 Share Repurchase Program (as defined below); and our investments in international markets. In addition, our liquidity could be impacted by risks associated with the wind-down of CarOffer, including the loss of future cash flows and wind-down and exit costs. Cash from operations could also be affected by various risks and uncertainties, including but not limited to macroeconomic effects and other risks detailed more specifically in the “Risk Factors” section in Part I, Item 1A in our Annual Report and in the “Risk Factors” section in Part II, Item 1A in this Quarterly Report.

On November 7, 2024, we announced that our Board of Directors authorized a share repurchase program, or the Original 2025 Share Repurchase Program, pursuant to which we may, from time to time, purchase shares of our Class A common stock for an aggregate purchase price not to exceed $200.0 million. On August 7, 2025, we announced that our Board of Directors amended the Original 2025 Share Repurchase Program to increase the authorization by an additional $150.0 million, for a total authorization to purchase shares of our Class A common stock for an aggregate purchase price not to exceed $350.0 million, and extended the expiration of the Original 2025 Share Repurchase Program from December 31, 2025 to July 31, 2026, or as amended, the 2025 Share Repurchase Program. Share repurchases under the 2025 Share Repurchase Program may be made through a variety of methods, including but not limited to open market purchases, privately negotiated transactions, and transactions that may be effected pursuant to one or more plans under Rule 10b5-1 and/or Rule 10b-18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The 2025 Share Repurchase Program does not obligate us to repurchase any minimum dollar amount or number of shares. Prior to its expiration, the 2025 Share Repurchase Program may be modified, suspended, or discontinued by our Board of Directors at any time without prior notice. All repurchased shares under the 2025 Share Repurchase Program will be retired. We have funded share repurchases and expect to continue to fund share repurchases under the 2025 Share Repurchase Program through cash on hand and cash generated from operations. During the three months ended June 30, 2025, we repurchased and retired 11,004 shares of our Class A common stock for $0.3 million, exclusive of commissions and excise tax, at an average cost of $29.89 per share under the Original 2025 Share Repurchase Program. During the six months ended June 30, 2025, we repurchased and retired 5,930,439 shares of our Class A common stock for $184.5 million, exclusive of commissions and excise tax, at an average cost of $31.12 per share under the Original 2025 Share Repurchase Program. As of June 30, 2025, we had remaining authorization to purchase up to $15.5 million of our Class A common stock under the Original 2025 Share Repurchase Program. As of August 7, 2025, we had remaining authorization to purchase up to $165.5 million of our Class A common stock under the 2025 Share Repurchase Program.

On November 7, 2023, we announced that our Board of Directors authorized a share repurchase program, or the 2024 Share Repurchase Program, pursuant to which we could, from time to time, purchase shares of our Class A common stock for an aggregate purchase price not to exceed $250.0 million. The 2024 Share Repurchase Program expired on December 31, 2024. All repurchased shares of our Class A common stock under the 2024 Share Repurchase Program were retired. We funded share repurchases under the 2024 Share Repurchase Program through cash on hand and cash generated from operations. During the three months ended June 30, 2024, we repurchased and retired 2,654,807 shares of our Class A common stock for $61.4 million, exclusive of commissions and excise tax, at an average cost of $23.11 per share under the 2024 Share Repurchase Program. During the six months ended June 30, 2024, we repurchased and retired 6,193,001 shares of our Class A common stock for $142.4 million, exclusive of commissions and excise tax, at an average cost of $23.00 per share under the 2024 Share Repurchase Program.

On August 6, 2025, our Board of Directors determined, after considering all reasonably available options and a broader strategic reassessment, that it is in the best interests of our stockholders to wind down CarOffer, including the CarOffer Transactions Business. We expect to substantially complete the wind-down activities in the second half of 2025. As a result of the intended wind-down, we expect to incur total expenditures in the range of approximately $14.0 million to $19.0 million, primarily in the second half of 2025. A significant portion of the cash payments are expected to be paid in the second half of 2025, with the remaining expected to be paid in the first half of 2026. For further information, refer to “Wind Down of CarOffer” above.

To the extent that our operating income, existing cash, cash equivalents, and our borrowing capacity under the 2022 Revolver are insufficient to fund our future activities, we may need to raise additional funds through a public or private equity or debt financing. Additional funds may not be available on terms favorable to us, or at all. See “*Risk Factors—Risks Related to Our Business and Industry—We may require additional capital to pursue our business objectives and respond to business opportunities, challenges, or unforeseen circumstances. If we are unable to generate sufficient cash flows or if capital is not available to us, our business, operating results, financial condition, and prospects could be adversely affected.”* in Part I, Item 1A in our Annual Report.

### Operating Activities

Net cash provided by operating activities of $141.0 million during the six months ended June 30, 2025, was due primarily to net income of $61.4 million, adjusted for $32.6 million of impairments, $25.9 million of stock-based compensation expense for equity awards to employees, $13.3 million of deferred taxes, and $13.2 million of depreciation and amortization expense.

Net cash provided by operating activities of $123.6 million during the six months ended June 30, 2024, was due primarily to net loss of $47.4 million, adjusted for $127.7 million of impairment due to organizational changes and Transaction volume declines, which resulted in revisions to our financial projections for the CarOffer reporting unit, $31.2 million of stock-based compensation expense for equity classified awards to employees, $44.2 million of deferred taxes, and $13.1 million of depreciation and amortization expense. Net cash provided by operating activities was also attributable to a $27.4 million increase in lease obligations primarily related to our new headquarters at 1001 Boylston Street.

### Investing Activities

Net cash used in investing activities of $15.5 million during the six months ended June 30, 2025, was due to $11.7 million in capitalized website development costs related to continued investments in our product offerings, and $3.8 million in purchases of property and equipment, primarily related to additions in capitalized internal-use software.

Net cash used in investing activities of $44.4 million during the six months ended June 30, 2024, was due primarily to $54.6 million in purchases of property and equipment primarily related to our new headquarters at 1001 Boylston Street and $10.7 million in capitalized website development costs due to continued investment in our product offerings, offset in part by $21.2 million in sales of short-term investments.

### Financing Activities

Net cash used in financing activities of $200.5 million during the six months ended June 30, 2025, was due primarily to $184.6 million in repurchases of our Class A common stock under the Original 2025 Share Repurchase Program and $15.3 million in payment of withholding taxes on net share settlements of restricted stock units.

Net cash used in financing activities of $154.0 million during the six months ended June 30, 2024, was due primarily to $142.5 million related to the repurchase of our Class A common stock under the 2024 Share Repurchase Program and $11.4 million related to the payment of withholding taxes on net share settlements of restricted stock units.

### Contractual Obligations and Known Future Cash Requirements

As of June 30, 2025, there were no material changes in our contractual obligations and commitments from those disclosed in our Annual Report, other than those appearing in the notes to the Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report, which are hereby incorporated by reference.

### Seasonality

Across the retail automotive industry, consumer purchasing activity is typically greatest in the first three quarters of each year, due in part to the introduction of new vehicle models from manufacturers and the seasonal nature of consumer spending. Additionally, the volume of wholesale vehicle sales can fluctuate from quarter to quarter driven by several factors, including the timing of used vehicles available for sale from selling customers, the seasonality of the retail market for used vehicles, and/or inventory challenges in the automotive industry, which affect the demand side of the wholesale industry.

Macroeconomic conditions, such as slower growth or recession, changes in international trade policies, including tariffs, volatile economic conditions, higher interest rates, unemployment, inflation, consumer confidence in the economy, consumer debt levels, labor disruptions, work stoppages, or strikes, geopolitical conflicts, foreign currency exchange rate fluctuations, and other matters that influence consumer spending and preferences, can also impact the volume of vehicle sales, as was evidenced by the global semiconductor chip shortage and other supply related shortages.

The Digital Wholesale segment operating results have reflected the general seasonality of the wholesale vehicle sales market and macroeconomic conditions of the automotive industry. As a result of the wind down of CarOffer, including the CarOffer Transactions Business, beginning in the second half of 2025, the seasonality fluctuations of the Digital Wholesale segment will cease over time. The U.S. Marketplace segment operating results have reflected the macroeconomic conditions of the automotive industry. However, to date, the U.S. Marketplace segment operating results have not been materially impacted by the general seasonality of the automotive industry. This could possibly change as our business and markets mature.

As a result, revenue and cost of revenue related to volume will fluctuate accordingly on a quarterly basis. Typical seasonality trends may not be observed in periods where other external factors such as changes in international trade policies, tariffs, higher interest rates, and other macroeconomic issues, more significantly impact the wholesale industry.

### Off-Balance Sheet Arrangements

As of June 30, 2025 and December 31, 2024, we did not have any off-balance sheet arrangements or material leases that are less than 12 months in duration, that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures, or capital resources.

### Critical Accounting Estimates

The preparation of the Unaudited Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period.

Although we regularly assess these estimates, actual results could differ materially from these estimates. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from management’s estimates if these results differ from historical experience, or other assumptions do not turn out to be substantially accurate, even if such assumptions are reasonable when made. Changes in estimates are recognized in the period in which they become known.

Critical estimates relied upon in preparing the Unaudited Condensed Consolidated Financial Statements include the determination of sales allowance and variable consideration in our revenue recognition, the impairment and useful lives of long-lived assets, the capitalization and useful lives of product, technology, and development costs for website development, internal-use software, and hosting arrangements, and the valuation and recoverability of intangible assets and goodwill. Accordingly, we consider these to be our critical accounting estimates and believe that of our significant accounting policies, these involve the greatest degree of judgment and complexity.

During the three months ended June 30, 2025, we identified a triggering event requiring an interim impairment test at the CarOffer reporting unit, due to the sustained low Transaction volume and a delay in the business’s expected return to growth. We performed an updated fair value analysis of the CarOffer reporting unit, which indicated an excess of carrying value over fair value of the CarOffer reporting unit and resulted in a partial impairment charge. For further discussion of impairments related to the CarOffer reporting unit, refer to Note 6 of the Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.

For a detailed explanation of the judgments made in these areas, refer to Note 2 of the Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report.

### Recently Issued Accounting Pronouncements

Information concerning recently issued accounting pronouncements can be found in Note 2 of the Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.

## Market risk

As filed, 3,714 characters.

Market risk represents the risk of loss that may affect our financial position due to adverse changes in financial market prices and rates. We are exposed to market risks as described below.

### Interest Rate Risk

As of June 30, 2025, our exposure to market risk associated with changes in interest rates related primarily to the 2022 Revolver, which allows us to borrow up to $400.0 million. The applicable interest rate is, at our option, based on a number of different benchmark rates and applicable spreads, as determined by the Consolidated Secured Net Leverage Ratio (as defined in Note 8 of the Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report). A fluctuation in interest rates does not have an impact on interest expense unless the 2022 Revolver is drawn upon. Such impact would also be dependent on the amount of the draw. As of June 30, 2025, there were no borrowings and $9.4 million in letters of credit outstanding under the 2022 Revolver Sub-facility associated with our leases, which reduced the borrowing capacity under the 2022 Revolver to $390.6 million. As of December 31, 2024, there were no borrowings and $9.9 million in letters of credit outstanding under the 2022 Revolver Sub-facility associated with our leases, which reduced the borrowing capacity under the 2022 Revolver to $390.1 million.

As of June 30, 2025, we had cash and cash equivalents of $231.2 million, which consisted of bank deposits, money market accounts, and mutual funds. As of December 31, 2024, we had cash and cash equivalents of $304.2 million, which consisted of bank deposits, money market accounts, and mutual funds.

Such interest-earning instruments carry a degree of interest rate risk. For the three months ended June 30, 2025 and 2024 and for the six months ended June 30, 2025 and 2024, fluctuations resulting from changes in the interest rate environment in interest income have not been material to our business, financial condition, or results of operations. Given recent changes in the interest rate environment and in an effort to ensure liquidity, we expect variable returns from our cash equivalents for the foreseeable future.

We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. As circumstances change, we will continue to reassess our approach to managing these risks.

### Inflation Risk

As of June 30, 2025 and 2024, we did not believe that inflation had a material effect on our business, financial condition, or results of operations. However, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, operating results, and financial condition. Additionally, inflationary pressures could negatively impact vehicle purchasing behavior, which could have an adverse impact on our financial results.

### Foreign Currency Exchange Risk

As of June 30, 2025 and 2024, we had foreign currency exposures in the British pound, the Euro, and the Canadian dollar, but fluctuations resulting from exchange rates between these foreign currencies and the U.S. dollar have not been material to our business, financial condition, or results of operations. However, fluctuations in exchange rates in the future may have a material impact on our business, financial condition, or results of operations. We have not used any financial instruments to manage our foreign currency exchange risk exposure. As circumstances change, we will continue to reassess our approach to managing these risks.

## Controls and procedures

As filed, 1,258 characters.

### Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Quarterly Report. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on such evaluation, our principal executive officer and principal financial officer has concluded that as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

### Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

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Careful consideration should be given to the factors discussed in Part I, Item 1A, “Risk Factors,” in our Annual Report, which could materially affect our business, financial condition, or future results, in addition to the information set forth in this Quarterly Report. The risk factor set forth below updates the risk factors in our Annual Report.

***The wind down of CarOffer, including the CarOffer Transactions Business, may adversely impact our business, results of operations, financial performance, and reputation.***

On August 7, 2025, we announced the wind down of CarOffer, including the CarOffer Transactions Business. Following a broader strategic reassessment, we concluded that CarOffer, including the CarOffer Transactions Business, has proven less effective in today’s more volatile and unpredictable pricing environment, where dealers require more flexibility and broader automation to streamline fulfillment than the model could provide and that it was in our best interest and the best interest of our stockholders to effect the wind down.

We expect to substantially complete the wind-down activities in the second half of 2025. As a result of the intended wind-down, we expect to incur total expenditures in the range of approximately $14.0 million to $19.0 million, primarily in the second half of 2025. We expect that a significant portion of the cash payments will be made in the second half of 2025, with the remaining paid in the first half of 2026.

The estimates of the charges and costs that we expect to incur, and the timing thereof, are subject to a number of assumptions and actual results may differ materially from those described above due to various factors, many of which are outside of our control, including the outcomes of discussions and negotiations with the counterparties to the contracts we intend to terminate or modify. In addition, we may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur as a result of or in connection with the wind down of CarOffer, including the CarOffer Transactions Business.

In addition, because of uncertainties with respect to our wind down plan (including those described above), we may not be able to realize the anticipated benefits of the wind down, or any benefits at all, or complete the wind down in the timeframe, on the terms or in the manner we expect, and the costs incurred in connection with such wind down activities may exceed our estimates. If the time to complete the wind down takes longer than expected, if we effect the wind down on terms or in a manner less favorable to us than currently anticipated, or if the actual costs or other non-cash charges exceed our estimates, then our business, operational results, financial position, and cash flows could be adversely affected.

Additionally, the wind down involves further risks, any of which may adversely impact our business, results of operations, financial performance, and reputation, including:

- the inability to retain qualified personnel necessary for the wind down during the wind down period;
- potential disruption of the operations of the rest of our businesses and diversion of management’s attention from such businesses and operations;
- disruptions in our relationships with dealers, customers, vendors, contractors, and employees given our decision to wind down CarOffer;
- exposure to unknown, contingent, or other liabilities, including litigation arising in connection with the wind down; and
- unintended negative consequences from changes to our business.

If any of these or other factors impair our ability to successfully implement the wind down, we may not be able to realize other business opportunities as we may be required to spend additional time and incur additional expense relating to the wind down that otherwise would be used on the development, expansion, and profitability of our business, which could adversely impact our business, results of operations, financial performance, and reputation.

***Our goodwill, intangible assets, and other assets have been subject to impairment in the past and may be subject to further impairment in the future, which could have a material adverse effect on our results of operations, financial condition, or future operating results.***

We evaluate the recoverability of recognized goodwill, intangible assets, and other assets for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. These impairment tests are based on several factors requiring management’s judgment, including identification of triggering events for reassessment and determination of the fair value of related assets. If such goodwill, intangible assets, or other assets are deemed to be impaired, an impairment loss equal to the amount by which the asset group’s carrying value exceeds the fair value of the net assets would be recognized. For example, in the three months ended June 30, 2024, we recognized a partial impairment charge of $127.5 million related to the CarOffer reporting unit and in the three months ended June 30, 2025, we recognized a partial impairment charge of $32.6 million related to the CarOffer reporting unit. Future events may cause impairments of our goodwill, intangible assets, or other assets based on factors such as the price of our Class A common stock, projected cash flows, assumptions used, operational challenges, or other variables. We cannot accurately predict the amount and timing of any impairment of goodwill, intangible assets, or other assets. We may be required to record a significant charge in our consolidated financial statements during the period in which any impairment of our goodwill or intangible assets is determined, which would negatively affect our results of operations, which could have a material adverse effect on our results of operations, financial condition, or future operating results.

***Our business, operations, and financial conditions may be adversely affected by tariffs, trade restrictions, trade disputes, or other changes in trade policy or trade regulation.***

Our business is affected by general business and economic conditions. The imposition of new or increased tariffs, trade restrictions, trade disputes, or other changes in trade policy or trade regulation by the U.S. or other countries could lead to an economic downturn that may impact our business. For example, purchases of new and used automobiles are typically discretionary for consumers and have been, and may continue to be, affected by negative trends in the economy, including the availability and cost of credit, reductions in business and consumer confidence, recessions, interest rates, inflation, stock market volatility, tariffs or the imposition of new tariffs, trade wars, barriers, or restrictions, or threats of such actions, and increased unemployment. Recent developments in international trade relations, including significant changes in U.S. trade policy and actions which include threatened, new, and increased tariffs on other countries and retaliatory tariffs and actions, if maintained for a sufficient period of time, could result in increased costs to American consumers for automobiles and automobile components produced or assembled in those countries, which could decrease demand for automobiles and negatively impact our business. Additionally, tariffs on steel and aluminum, raw materials used significantly in automobile manufacturing, as well as the tariffs that may be imposed on automobile imports, if maintained for a sufficient period of time, could each have similar negative impacts on the prices of cars, consumer demand, and our business. Any significant change or deterioration in economic conditions could have a material adverse effect on our business, operations, results of operations, and financial condition.

Filed Aug 7, 2025.
Source: SEC EDGAR, the filing index for accession 0000950170-25-105055. Last ingested by Listed: Nov 4, 2026, 18:35 ET. No prices; not investment advice.