Online auto marketplace CarGurus (NASDAQ: CARG) met Wall Street’s revenue expectations in Q2 CY2026, with sales up 13.1% year on year to $251 million. On the other hand, next quarter’s revenue guidance of $256 million was less impressive, coming in 0.7% below analysts’ estimates. Its non-GAAP profit of $0.66 per share was 7.6% above analysts’ consensus estimates.
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CarGurus (CARG) Q2 CY2026 Highlights:
- Revenue: $251 million vs analyst estimates of $250 million (13.1% year-on-year growth, in line)
- Adjusted EPS: $0.66 vs analyst estimates of $0.61 (7.6% beat)
- Adjusted EBITDA: $84.72 million vs analyst estimates of $81.4 million (33.8% margin, 4.1% beat)
- Revenue Guidance for Q3 CY2026 is $256 million at the midpoint, below analyst estimates of $257.7 million
- Adjusted EPS guidance for Q3 CY2026 is $0.66 at the midpoint, above analyst estimates of $0.63
- EBITDA guidance for Q3 CY2026 is $86 million at the midpoint, above analyst estimates of $82.85 million
- Operating Margin: 25.1%, down from 27.3% in the same quarter last year
- Free Cash Flow Margin: 34.9%, up from 25.9% in the previous quarter
- Paying Dealers: 34,629, up 1,534 year on year
- Market Capitalization: $3.28 billion
“We delivered strong second-quarter results, with 13% year-over-year revenue growth and continued momentum in our International business,” said Jason Trevisan, Chief Executive Officer at CarGurus.
Company Overview
Bringing transparency to a sometimes opaque process, CarGurus (NASDAQ: CARG) is a digital marketplace where auto dealers can connect with potential customers and where car buyers can browse, purchase, and obtain financing.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last three years, CarGurus’s demand was weak and its revenue declined by 6.5% per year. This wasn’t a great result and is a rough starting point for our analysis.
This quarter, CarGurus’s year-on-year revenue growth was 13.1%, and its $251 million of revenue was in line with Wall Street’s estimates. Company management is currently guiding for a 10.5% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 9.5% over the next 12 months. Although this projection implies its newer products and services will fuel better top-line performance, it is still below average for the sector. At least the company is tracking well in other measures of financial health.
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Paying Dealers
User Growth
As an online marketplace, CarGurus generates revenue growth by increasing both the number of users on its platform and the average order size in dollars.
Over the last two years, CarGurus’s paying dealers, a key performance metric for the company, increased by 5% annually to 34,629 in the latest quarter. This growth rate lags behind the hottest consumer internet applications. If CarGurus wants to accelerate growth, it likely needs to engage users more effectively with its existing offerings or innovate with new products. 
In Q2, CarGurus added 1,534 paying dealers, leading to 4.6% year-on-year growth. The quarterly print isn’t too different from its two-year result, suggesting its new initiatives aren’t accelerating user growth just yet.
Revenue Per User
Average revenue per user (ARPU) is a critical metric to track because it measures how much the company earns in transaction fees from each user. ARPU also gives us unique insights into a user’s average order size and CarGurus’s take rate, or “cut”, on each order.
CarGurus’s ARPU growth has been decent over the last two years, averaging 5.6%. Its ability to increase monetization while growing its paying dealers demonstrates the value of its platform. 
This quarter, CarGurus’s ARPU clocked in at $6,771. It grew by 6.6% year on year, faster than its paying dealers.
Key Takeaways from CarGurus’s Q2 Results
We enjoyed seeing CarGurus beat analysts’ EBITDA expectations this quarter. We were also glad its EBITDA guidance for next quarter exceeded Wall Street’s estimates. On the other hand, its revenue guidance for next quarter slightly missed. Overall, this print had some key positives. The stock traded up 5.2% to $38.30 immediately following the results.
So do we think CarGurus is an attractive buy at the current price? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).
